Ladish Co. seems ready to soar

Jun 07, 2009 (Milwaukee Journal Sentinel - McClatchy-Tribune Information Services via COMTEX) -- LDSH | Quote | Chart | News | PowerRating -- Like many investors, stockholders of Ladish Company Inc. have felt the pull of gravity imposed on their investment by the weak economy and stock market declines of late last year and early this year.

But hopes that the long-awaited Boeing 787 finally will get off the ground are giving some lift to share prices for the Cudahy-based maker of key parts for jet engines.

A $1,000 investment in Ladish at the beginning of May would have been worth $1,557.46 at the end of the month, making it among the top-performing public company stocks in Wisconsin during that period, an analysis by Bloomberg News for the Wisconsin Ticker shows.

Other big winners for May include MGIC Investment Corp., which is seeing its stock climb back from the depth of the nation's financial and housing crisis. Also, Merge Healthcare, the West Allis developer of medical imaging software, continues to see its shares rise after three profitable quarters under its new executive team.

For Ladish, May's rise in the stock price may be some consolation to investors who owned the stock a couple of years ago when it traded in the $50s.

"The stock was so ravaged, like a lot of things," said John Collopy, director of research for Brigg-Ficks Securities LLC in Milwaukee. "With the rest of the market improving as it has, my guess is it was just a late participant."

But Collopy, too, said Boeing's 787 Dreamliner aircraft, expected to be built for airline companies for years, "will be an impetus" for Ladish's performance.

"There's no doubt about it," Collopy said.

Collopy cited a recent Barron's article that suggested curtailing investment in defense stocks as the U.S. military pares its spending during the next few years. The exceptions, however, were Boeing and Rockwell-Collins, because of their involvement in the commercial aerospace market.

Says Stephen Levenson, a stock analyst in New York with Stifel Nicolaus & Co.: "The Boeing 787 has been delayed for quite a long time, but it's apparently getting closer to first flight and I think people are looking to see who may be leveraged to 787, and Ladish is one of the names."

Levenson said the Boeing 787, which is billed as a more fuel-efficient mid-size airliner, will be powered by engines made by General Electric and Rolls-Royce.

Engine work

Ladish does business with GE, but it's a big supplier to Rolls-Royce, Levenson said. Rolls-Royce Trent 1000 engines are on the first four 787 test models, he said.

Ladish, which makes forged metal components, produces jet engine parts that withstand great heat and high speed, Levenson said.

"Trent engines are going to power a meaningful number of 787s," he said.

Ladish posted a down first quarter -- net income of $1.2 million compared with $6 million in the first quarter of 2008 on sales of $105.7 million and $117.2 million, respectively. In the company's earnings announcement in late April, Kerry L. Woody, Ladish's president and chief executive, predicted its markets would remain challenging this year "as the world economy works its way through the current recession."

But he said the company expected to emerge from the economic downturn, as it has after other recession during its 104-year history, "fully positioned to take advantage of the inevitable recovery."

"It's (the stock price is) a long way from where it was, but I like the company," said Collopy, who closely follows Wisconsin's publicly traded businesses. "I like the people down there. I think they're going to be fine."

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