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3 Stocks to Watch for the Future of Air Travel

Take a look at any one of the roughly 5,000 public airports in the United States, and it's likely a modern technological marvel filled with people, most of whom are excited to be getting on a plane. The same is true for most public airports in the developed world, but it's not nearly as true in the developing world, where air travel is still, pardon the pun, taking off. That's why the future of air travel is so exciting, and why you'll want to watch companies like Boeing Co , Air Lease Corp , and Alcoa Inc

The obvious...

If you want to invest in the future of air travel, the most obvious place to start is the airplane. And for that, you can't find a better option than Boeing, essentially one of a very small handful consumer aircraft manufacturers in the world. Even if you've never been on a plane, you probably know some of its popular models, like the iconic Boeing 747.

What Alcoa can add to a jet engine. Image source: Alcoa.

Gotta have parts

These companies are both pretty well tied to air travel. But what about a company that's a little different, like Alcoa? At its core, Alcoa is an aluminum company, which makes it the outlier in this trio. But aluminum is a fundamental building block in the airplane space. You'll find it in everything from the hull to the engine. Moreover, Alcoa has just announced plans to split itself in two .

One company, which will retain the Alcoa name, will own the legacy aluminum assets. The other, the one you'll want to keep an eye on, will own Alcoa's specialty businesses, which is where the aviation parts operations will live.

Although the split is still a long way off, aerospace will make up around 40% of the "Value-Add Company's" revenues. That less-than-creative name is what they're going with for now; one can only hope a marketing firm will help them find something more creative. Alcoa projects roughly 9% annualized growth in the aerospace segment, which will make it the fastest growing business in the new entity by a wide margin. Aerospace accounted for roughly $5.6 billion of Alcoa's $24 billion of revenues in 2014, so near 10% growth translates into some pretty big numbers.

What's interesting here, however, is that Alcoa has used acquisitions and home-grown technology to expand its reach. For example, the Firth Rixson acquisition allows the company to produce 90% of a jet engine's structural and rotating components -- giving it more share of this vital part of the plane. And internally, the company helped to find a way to reduce the weight of an engine blade by 20% (less weight means better fuel economy). So, if you want to get to the basics of the airline industry's future, Alcoa will likely be playing a part.

That said, you may want to wait until after the split, so you can pick up just the "Value-Add" business instead of ending up with the company's legacy assets, too.

A high-flying future

The future of air travel will be seen most directly at the airlines, but they are only the tip of the iceberg. If you want to get in on the planes, Boeing is a great fit. If you want to play the airlines without having to pick the winners and losers, Air Lease will be a big part of the story, helping multiple airlines afford the most modern jets. And, taking a different look at the space, Alcoa, or eventually its "Value-Add Company" spin off, is increasingly providing the highly complex aluminum parts that make flight possible. You'll definitely want to keep these three names on your watch list if you are watching the aerospace arena with the expectation of good things to come.

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The article 3 Stocks to Watch for the Future of Air Travel originally appeared on Fool.com.

Reuben Brewer has no position in any stocks mentioned. And while he loves how easy it is to fly, he still kind of gets nervous on take offs and landings. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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