Titanium makers show strength ( 04 July 2007 )

Investors might have overlooked titanium makers among the frenzied merger activity of copper, nickel and aluminium producers this year. But that could change as two companies look poised to profit from strong titanium demand from aircraft manufacturers.

Kuni Chen, an analyst at Bank of America (nyse: BAC), said Tuesday that producers Titanium Metals (nyse: TIE) and RTI International (nyse: RTI) have the best long-term growth prospects in the metals industry. He explained demand for their products is increasing from commercial aerospace companies as they ramp up plane production.

Airplane makers use titanium because of its relative lightness, strength and resistance to high temperatures. Boeing (nyse: BA) and Airbus have upped the output of new planes as the airlines replace aging fleets.

Investors have the opportunity to pick up shares of the titanium producers after a recent run-down in prices. In the past three months, shares of RTI have fallen 12.2%, and shares of Titanium Metals have fallen 10.3%. Worries the companies will miss expectations for second-quarter performance have pressured their shares, but Chen said such concerns appear unfounded.

Analysts polled by Thomson Financial are expecting that Titanium Metal, of Dallas, will earn 42 cents per share. They are expecting RTI, of Niles, Ohio, to earn $1.04 per share.

In Tuesday trading, shares of RTI International closed up $2.16, or 2.7%, at $81.11. Shares of Titanium Metals ended the day down 13 cents, or 0.4%, to $32.61. Chen has a "buy" rating on both.
Miners and metals producers have been furiously consolidating over the past year. Companies are anxious to expand as metals prices boom, untapped reserves rapidly diminish and increased size offers savings via economies of scale. – Forbes