This Philly-based steel stock has rocketed as SpaceX shot up
Carpenter Technology and other Pennsylvania aerospace stocks have zoomed alongside Spacex as military, aerospace spending surge.
It’s not just SpaceX on the rise.
Elon Musk’s company that runs the Starlink communications network, launches rockets for NASA, and develops artificial intelligence software raised more than $75 billion from investors last week — a record initial public stock offering (IPO) for a company fast-burning through billions in investor dollars in hopes of future profit.
SpaceX is just the flashiest of a string of industrial stocks that have soared as orders for missiles, drones, and other war machines, as well as civilian aircraft and rockets, pile up. S&P’s Aerospace and Defense Select Industry Index is up 44% over the past year vs. 24% for the broader S&P 500 stocks, even with Google, Nvidia, and other AI-linked stocks leading the 500.
The share price for Philadelphia-based Carpenter Technology is up 125%, almost three times as much as that index of aerospace and defense stocks.
Carpenter does $3 billion in annual sales, melting or grinding iron, tungsten, cobalt, and other metals into super hard or relentlessly flexible alloys used in stainless steel and other specialty parts by military, commercial airliner, medical, industrial, and space equipment makers.
The company operates plants in Reading, Berks County; Latrobe and other Western Pennsylvania towns; and around Athens, Ala. It has a finishing plant in China and distributors worldwide. Carpenter’s large customers include passenger jet and military aircraft maker Boeing and European aerospace giant Airbus.
CEO Tony Thene has said space is a fast-growing growing part of Carpenter’s customer base, exciting some investors into expecting the company will share SpaceX’s gains.
Thene, who is stepping down at the end of the month, hasn’t said SpaceX is a customer. Chief operating officer Brian Malloy will take over leading the company.
Investor Louis Navellier was quoted last month as saying he’d rather own Carpenter, which makes the metals used by SpaceX and other aerospace companies, and its larger customer, Pittsburgh-based Howmet Aerospace, than SpaceX itself, at recent valuations.
In an article in Barron’s, also last month, polled analysts predicted Carpenter stock would rise into the high $500s — as it has in the four weeks since.
That price is above the targets set by analysts at Bala Cynwyd-based Susquehanna International Group and Wall Street brokerages after Thene reported earnings at the end of April. At that time, Carpenter officials predicted stronger than expected sales and higher profits, to be split between investor dividends and new furnace equipment.
Carpenter at recent valuations is worth around $30 billion, roughly as much as Hershey or Kraft Heinz, whose sales are much larger, and almost as much as gas-drilling giant EQT, based in Pittsburgh.
Shares of area aerospace manufacturers such as Ametek, which has its headquarters in Berwyn and plants around the world, and Innovative Aerosystem, of Exton, are also up significantly over the past year.
Triumph Group, an aerospace manufacturer based in Radnor, was bought by private equity companies last year. Growth at privately held Piasecki Aircraft has slowed after delays in private and government contracts.
Howmet, with $8 billion in yearly sales to Carpenter’s $3 billion, hasn’t boosted its share value as fast in past year, but it has risen enough to become the most valuable company in Pennsylvania, the only company whose shares are worth over $100 billion on the stock market.
That’s more valuable than companies with much larger sales, such as Philadelphia-based media giant Comcast; mega-drug distributor Cencora of Conshohocken, or Pittsburgh’s PNC, the nation’s fifth-largest bank.
At today’s share prices, many times earnings or projected future profits, investors are gambling that suppliers like Carpenter and Howmet — and SpaceX, the spaceship builder — will grow a lot faster than the economy as a whole.
