Winds of war propel parts maker's shares.

• Author: Speizer, Irwin
• Position: Money Matters

When stock in Goodrich Inc. (NYSE: GR) took flight this summer, it surprised the analysts who track it. Nearly all of them have maintained a hold or neutral rating on the Charlotte-based aeronautical-parts maker, and their reports sing a refrain about how airline industry woes are hurting its parts suppliers.

Yet investors have been scooping up Goodrich shares as if they were free beers at an Oktoberfest. The stock is up nearly 79%, from about $14 in April to about $25 in early October. Analyst Paul Nisbet, vice president of Newport, R.I.-based JSA Research, thinks investors may come away with a hangover.

The stock, he says, is overpriced and poised for a slump. Here's his reason: The airline industry has shown no signs of a rebound. Nisbet, like most industry analysts, doesn't expect business to pick up until 2005 or 2006. Once investors catch on, they might start selling, which would drive down the price. "If you are willing to wait until '05 or '06, who knows? But you'd have to be a long-term investor."

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So why the rush to buy Goodrich, which gets 94% of its sales from the aerospace industry? Part of it might be the conflict in Iraq and the "war on terror," which boost defense spending. It's one reason the Dow Jones Aerospace Index is up about 60% since March. But if war is good for the military side of the aerospace industry, it is...