Titanium/Metal Stocks - What a Difference a Week Makes

As of 2:16 Pm yesterday the companies I outlined here (remember those, with the weak charts?), skyrocketed - all rallying from 8-13% in just a few hours. I guess people were viewing them as recession plays? Not sure why the half point cut makes 'that' much of a difference in their prospects, but again - to argue with the market is fruitless. It wasn't just the titanium plays but nearly each and every metal stock just blew through the roof. Throw a dart, hit a metals stock that exploded. Now that's investing. ;)

So I will wait for these stocks to pull back and in this new environment of see no evil, hear no evil, they have changed from avoid to "buy buy buy". I will probably still concentrate on Allegheny Technologies (ATI) with its mix of titanium and stainless steel, but might consider one of the other two names Titanium Metals (TIE) or RTI International Metals (RTI) as well.

RTI did have a great long term announcement yesterday, hitching itself to Airbus for the long term, and expanding for the long term an existing business contract.

• (Reuters) - RTI International Metals Inc (NYSE:RTI) entered into a supplemental agreement with Airbus for the long-term supply of titanium mill products, valued in excess of $1.1 billion, the titanium producer said Monday.
• The agreement supplements the earlier deal announced in 2006 and would start in 2010 and run through 2020, said RTI, a long-standing supplier for the European plane maker.
• RTI will supply a guaranteed minimum of 45 million pounds of titanium mill products over the term of the agreement, the company said, adding the products support the manufacture of Airbus planes, including the largest passenger aircraft A380.
• The Niles, Ohio-based company also said it would build a titanium sponge facility in Hamilton, Mississippi, for a projected cost of $300 million, in addition to a previously announced $100 million facilities expansion.
• The facility, which will begin operations in 2010, would support the new Airbus agreement as well as the recent $2 billion contract extension with Lockheed Martin (NYSE:LMT) for the F-35 Joint Strike Fighter program.

I'm still more a fan of the Boeing Dreamliner than Airbus A380, but since RTI is a relatively small company it can still do very well attached to the hip with Airbus.

This out from Allegheny Technologies last evening via Reuters

• NEW YORK, Sept 18 (Reuters) - Allegheny Technologies Inc (ATI) said on Tuesday it is increasing its titanium and specialty alloy production on the strength of an anticipated doubling of the global aircraft fleet in the next 20 years.
• Chief Financial Officer Richard Harshman said the company was also looking to benefit from the planned building of more nuclear power plants in the United States and overseas.
• The company is investing approximately $925 million through 2009 on new plants to produce nickel-based alloys and titanium sponge -- the raw material for the metal
• The number of aircraft in the world in 2006 was 18,200 and with a projected six-percent annual growth in cargo planes and five-percent growth in passenger aircraft, there will be 36,400 by the year 2026, Harshman said.
• "New airplanes are coming in the emerging markets of India, China and the Middle East, and also orders for legacy carriers in the U.S. and Europe."
• Harshman said in the first half of 2007, high performance specialty metals and alloys accounted for 34 percent of Allegheny Technologies' sales, with 70 percent of production in the aerospace and defense sectors. It also produces stainless steel and flat-rolled steel products.
• With airlines looking for more fuel efficiency, plane makers are using more titanium, which is lighter than steel and stronger than aluminum. World production is expected to rise by approximately 30 percent from the current 86 million pounds per year, Harshman said. Allegheny Technologies is on track to double titanium production to 62 million pounds by 2010.
• It also expects wider use of wind and nuclear power to boost use of titanium for windmill hubs and nuclear rods. "We are looking at the role of nuclear. There is significant growth potential as new plants are licensed in the U.S," said Harshman.
• He cited industry figures showing 27 applications for nuclear plants in the United States in the next two years, as well as 30 reactors coming on line in China and 20 in India by 2020. Russia has 26 reactors planned by 2016 and 60 by 2027.

So as I stated before the fundamentals have always been quite positive in this group, only the technicals were damaged - now with both on the same page again, you have to get constructive on the group again.

Long Allegheny Technologies in fund; no personal positions