Heico Corporation: Bullish Breakout and Earnings Catalyst Create High-Conviction Opportunity

The Setup:
Heico Corporation (HEI) is primed for a breakout above critical technical resistance, aligning with robust fundamental catalysts ahead of its Q2 earnings. Investors sitting on the sidelines should take note: the stars are aligning for a high-reward, low-risk entry.

Technical Validation: A Breakout with Legs

Heico’s price action confirms a strategic buying opportunity as it clears key resistance levels:

1. Resistance Breakout:
2. Current price: $278.06 (May 20, 2025).
3. 200-day SMA: $251.56 (well below current price).
4. 50-day SMA: $257.70 (buy signal confirmed).
5. Daily SMA 3: $274.17 (bullish crossover).

1. Bullish Sentiment:
2. 92% bullish sentiment among traders.
3. RSI (14-day): 51.63 (neutral, no overbought warning).

4. Short-term forecasts: $280.79 by May 25 (+0.98%), with a 1-month target of $291.72 (+4.53%).

5. Pattern Confirmation:
   The stock has formed a bullish ascending triangle pattern, with support at $258 and resistance at $283. A break above $283 would validate a multi-month rally.

Fundamental Catalysts: Growth and Valuation Mispricing

Heico’s Q2 earnings (reporting May 20, 2025) are expected to deliver 11.13% revenue growth to $1.06 billion, with EPS surging 16.44% to $1.20, driven by:

1. Aerospace Demand Surge:
2. Defense contracts: Growing at 9% YoY, fueled by global military modernization.

3. Commercial aftermarket: 13% growth in business jets and helicopters.

4. Margin Expansion:

5. Net margin forecast to rise to 15.9% in 2025 (vs. 15.2% in 2024).

6. FCF margin improving to 17.76% by .

7. Undervalued Relative to Peers:
   While HEICO’s P/E (68.98) is elevated, its EV/EBITDA of 34.99 is justified by superior growth compared to peers:

8. Lockheed Martin (LMT): EV/EBITDA 14.18 (lower growth profile).
9. TransDigm Group (TDG): EV/EBITDA 24.03 (but slower aftermarket growth).

Risk-Reward: A 1:2.5 Reward-to-Risk Ratio

• Entry Point: Buy at $278.06 (current price).
• Target: $291.72 (1-month forecast, +4.53%).
• Stop-Loss: Below $250 (200-day SMA support).

This setup offers $13.66 profit potential versus $28 risk, yielding a 1:2.5 reward-to-risk ratio.

For a more aggressive stance, aim for the $311.89 upper end of the 2025 price range (+12.17% from current price).

The Catalyst: Earnings-Driven Momentum

Heico’s earnings on May 20, 2025, will likely exceed expectations, mirroring its Q1 outperformance (+15.38% EPS growth). A positive report could trigger a 16.9% surge, as seen after its February earnings beat.

Action Plan: Buy Now, Set Limits

• Buy: $278.06 (now).
• Target: $291.72 (1-month).
• Stop-Loss: $250.

Final Call:
Heico’s technical breakout, earnings catalyst, and growth-driven valuation mispricing create a once-in-a-quarter opportunity. With a favorable risk-reward profile and a track record of post-earnings momentum, this is a must-act setup. Open a position before the market digests Q2 results—it’s time to buy HEI.

Note: Past performance does not guarantee future results. Always consult a financial advisor before making investment decisions.