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Forget the Falling Stock Market -- These 2 Stocks Are Flying Higher Monday

By Dan Caplinger - Mar 29, 2021 at 12:22PM

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These smart companies are making strategic moves at an opportune time.

The stock market got off to a slow start on Monday morning, moving lower as investors await more signs of how the broader economy is doing. Many market participants are anxious about what Friday's latest figure on employment will say, especially in light of ongoing nervousness about the pace of COVID-19 immunizations and the high expectations that Wall Street has about a likely economic boom in 2021.

As of 11 a.m. EDT, the Dow Jones Industrial Average (^DJI 1.34%) was down 138 points to 32,935. The S&P 500 (^GSPC 2.02%) lost 29 points to 3,946, and the Nasdaq Composite (^IXIC 2.76%) was lower by 154 points to 12,984.

Yet even as the broader market fell, a couple of stocks were posting gains based on strategic moves. Fly Leasing (FLY) is likely to stop being a publicly traded company in the near future, but Houghton Mifflin Harcourt (HMHC) took a slightly different tack that should benefit shareholders in the years to come.

Airplane with landing gear down just above runway, with sunrise or sunset ahead.

Image source: Getty Images.

Fly gets snapped up

Shares of Fly Leasing jumped 27%. The aircraft-leasing specialist got an offer it couldn't refuse, and the resulting offer shows just how optimistic investors are about the likelihood of a full recovery in the commercial-aerospace industry.

Carlyle Aviation Partners, which is part of private-equity giant Carlyle Group, made a $2.36 billion offer to buy out Fly Leasing. Under the terms of the deal, Fly Leasing shareholders will receive $17.05 per share in cash, which is 29% above where the stock closed Friday.

Fly Leasing has 84 aircraft in its fleet, along with seven aircraft engines. It counts more than three dozen airlines among its renters, scattered across 22 different countries around the world. Fly CEO Colm Barrington argued that the deal makes sense given that "airlines are facing an extremely difficult environment and smaller aircraft lessors are disadvantaged in the debt markets."

The move comes on the heels of General Electric selling its aircraft-leasing business to AerCap earlier this month. The pandemic hit the aerospace industry hard, so it's not surprising to see consolidation within the aircraft-leasing space.

Publisher makes a sale

Elsewhere, Houghton Mifflin Harcourt shares were up 14%. The publishing company made a move to sell off part of its business to a rival in order to narrow its focus going forward.

Houghton agreed to sell its consumer publishing business to rival publisher HarperCollins, which is part of media giant News Corp. (NWSA 3.57%). The deal will send $349 million in cash to Houghton.

The move will allow Houghton to concentrate entirely on its K-12 educational business. Textbooks and other educational products have increasingly moved online, and Houghton expects that it can accelerate its growth in digital sales and produce more lasting streams of recurring revenue from its educational clients. Houghton hopes to use the proceeds from the sale to help pay down debt and strengthen its balance sheet.

Houghton's stock has been on the decline since the mid-2010s, but it's bounced back considerably over the past year. Investors seem to like the way that the publisher is trying to transform itself, and given how much demand there is from the educational industry, Houghton's strategy makes a lot of sense in helping the company concentrate on what's likely its best path forward in pursuit of profits.

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Stocks Mentioned

Fly Leasing Limited Stock Quote
Fly Leasing Limited
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$32,654.59 (1.34%) $431.17
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,088.85 (2.02%) $80.84
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,984.52 (2.76%) $321.73
General Electric Company Stock Quote
General Electric Company
$76.40 (2.37%) $1.77
Carlyle Group L.P. Stock Quote
Carlyle Group L.P.
News Corporation Stock Quote
News Corporation
$18.26 (3.57%) $0.63
AerCap Holdings N.V. Stock Quote
AerCap Holdings N.V.
$48.20 (6.19%) $2.81
Houghton Mifflin Harcourt Company Stock Quote
Houghton Mifflin Harcourt Company

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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