Helicopter Trio

John Persinos, of Personal Finance, looks at a sector with high-flying potential—helicopters—and highlights a trio of plays in medical transport, offshore drilling platform services, and manufacturing.

Steve Halpern: We're here today with John Persinos, editorial director of Personal Finance, as well as his parent Web site, Investing Daily. How are you doing, John?

John Persinos: I'm doing great. Thanks for taking the time to speak with me. I'm looking forward to this.

Steve Halpern: Most listeners would likely be perplexed when first hearing that our topic today is a very specific industry sector, whose upside catalysts include, both Obamacare, and offshore drilling. That's an unexpected combination. Perhaps you could explain what area both of those are focused on.

John Persinos: Sure. Well, you know, we're talking about helicopters right now, and that is a sector that I would, daresay, most investors don't think about, don't realize that there are good investment opportunities there. It's given the short shrift by Wall Street.

It's considered, sort of obscure and esoteric, but, actually, helicopters are a very important product city enhancing tool, they're lifesaving tools and they are vital for the offshore oil industry, and they're vital for Emergency Medical Services. Emergency Medical Services forecast a boom over the next two years.

They've already been on an upward trajectory, and expansion of medical care under Obamacare, under the Affordable Care Act, will increase the use of Emergency Medical Services, and a key tool in the Emergency Medical Services is the helicopter.

And as the oil patch—the energy patch—continues to grow, companies are drilling ever farther, ever deeper offshore, deep water and ultra-deep water drilling is becoming more prevalent. That means that oil companies need to get workers back and forth to the oil rigs, and the only machine capable of getting workers out to an oil rig and back again quickly and safely is the helicopter.

So, Obamacare and increased offshore drilling will both fuel growth in the helicopter sector. Those are two main catalysts, and you're right, a lot of people aren't connecting the dots, and they may be surprised to hear that, but those are definite multi-year trends.

There are other factors fueling growth in the helicopter business. One is the resurgence of aerospace in the wake of the 2008/2009 great recession, aerospace was in a severe slump, and then it took another hit after 9/11, but now, as global economic recovery is firmly on track, commercial and defense aviation is booming.

Most analysts predict record profits for airlines in 2014, and that's no small feat because the airlines tend to suffer from razor-thin profit margins, but there is more and more demand for air travel, especially in emerging markets where there is a rising middle class—consumers in China and in the adjacent Asian countries, and in other emerging markets—there's going to be more money in their pockets.

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They are pursuing what they see as a good life in the west, and that means air travel, that means buying tickets. That's fueling prosperity in aviation, which is rebounding to helicopters favor.

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