Taking Wing With Kellstrom

When Zivi Nedivi took over in August as president of Kellstrom Industries (KELL), he did something unusual for a chief: He bought $1 million worth of stock at market price--5 1/2 a share. Since he was going to run Kellstrom, explains Nedivi, he knew the shares were a bargain. Indeed, he knows the company well: Nedivi owned it when it was a private outfit known as Rada Electronic Industries, an Israeli avionics-systems maker.

Kellstrom now buys, refurbishes, and resells parts for commercial-jet engines. Customers include Northwest Airlines, TWA, El Al, and various engine makers and parts distributors. So far, business has been brisk, thanks to the world's aging aircraft and a shift by many airlines toward keeping a very lean inventory of spare parts.

Kellstrom helps customers reduce engine-maintenance costs by providing competitively priced engine parts. The company "leads the market in quality assurance," says Anthony Stoss, an analyst at GKN Securities. He sees revenues jumping to $22 million in 1996, up from an estimated $14 million this year. He expects Kellstrom to earn $1.3 million, or 31 cents a share (fully diluted) this year and $2.3 million, or 44 cents next year. It earned $736,000, or 27 cents, last year. Chairman Yoam Stern thinks these estimates may prove conservative. David Jordon of J.W. Charles Securities thinks the stock is cheap: "With its fast growth and planned acquisitions, the stock will at least double in a year," he says.