Familiar names Nvidia (NVDA), Palantir Technologies (PLTR), Microsoft (MSFT) and Broadcom (AVGO) made the latest list of new buys by the best mutual funds, which comes out Friday. But one stock eclipsed them all: defense and aerospace leader AAR Corp. (AIR)
Top money managers poured an eye-popping $8.06 billion into AAR Corp. That easily surpassed the still-impressive amounts they invested in artificial intelligence juggernauts Nvidia, Microsoft, Palantir and Broadcom. And now, boosted by that demand, shares of AAR Corp. are gearing up to shake off recent turbulence and take flight.
Based in the Chicago area in Wood Dale, Ill., AAR Corp. sells aerospace and defense aftermarket solutions. With a global footprint, it operates in over 20 countries. In addition to AAR, the company's wholly owned Trax subsidiary sells aviation maintenance mobile and cloud products across the aviation market worldwide.
As the table below shows, the best mutual funds poured billions into bellwether AI stocks in the latest monthly report. Nvidia raked in $4.83 billion, and Microsoft saw capital inflows of $3.69 billion. Palantir and Broadcom each took in more than $1 billion.
Other signs of demand for AAR Corp. include a B+ Accumulation/Distribution Rating and a 1.4 up/down volume ratio. It also sports a very strong 98 Composite Rating. That stands just slightly behind Nvidia, Palantir, Microsoft and Broadcom, all of which earn the highest-possible 99 rating.
| Company | Symbol | Amt invested (bil) | Comp Rating |
|---|---|---|---|
| AAR Corp | (AIR) | $8.06 | 98 |
| Nvidia | (NVDA) | 4.83 | 99 |
| Microsoft | (MSFT) | 3.69 | 99 |
| Palantir Technologies | (PLTR) | 1.71 | 99 |
| Broadcom | (AVGO) | 1.44 | 99 |
Over the last three quarters, AAR Corp has generated average earnings growth of just under 20%, including a 32% gain to $1.16 per share posted on July 16. Sales growth rose 15% to $754.5 million for the quarter.
For the full fiscal year, analysts forecast 14% earnings growth to $4.45 per share.
On July 17, the day after reporting earnings, AAR shares bolted nearly 14% to hit a 52-week high. Volume came in 500% above average.
But since then, the stock has retreated, slipping below its 21-day exponential moving average. However, volume on the pullback has been relatively light, a sign that large investors are not selling aggressively. And while the relative strength line has turned lower, AAR Corp. remains above its rising 50-day line.
The stock has encountered long-term resistance around the 73-76 range on multiple occasions. In August of last year, it reset its base count by undercutting the low in its prior pattern. Investors could view its current setup as a long, first-stage consolidation with a 76.34 buy point.
So, as AAR Corp. navigates the current turbulence, see if strong underlying demand can propel the stock past that long-term resistance and back into buy range.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
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