CEO Nicholas Galluccio of Teton Advisors, Inc. says AAR Corp. (AIR) is a stock his firm has held for many years, and continues to hold as airlines increasingly outsource their spare parts inventory and maintenance.
“AAR Corp. is a company that is a spare parts supplier and a logistics manager for the global airline industry. Many of the large airlines are their major customers,” Galluccio said. “AAR historically refurbishes spare parts and resells them to the global airline industry, and contracts to be the inventory manager for those spare parts as well.”
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Galluccio says AAR also buys used airplanes to strip for parts, then refurbishes the parts to resell them. With its recurring-revenue-stream model, Galluccio will continue owning the stock.
“It’s a free cash flow business, it’s run by a competent management team, and we are very comfortable owning the stock for many years. The stock has doubled since our original purchase,” Galluccio said.
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