Metal is metal, right? Well, it isn't really that simple. You wouldn't want the airplane that ferries you far and wide to visit friends, family, and foreign lands made by people who think "metal is metal," would you?

That's equally true for a number of applications in medicine, automobiles, and industrial applications. There's a time and a place for special alloys with favorable strength, weight, fatigue, or rigidity characteristics, and that's where companies such as Carpenter Technology (NYSE:CRS) come into the picture.

Simply put, demand for special materials was pretty special in Carpenter's fiscal second quarter. Sales of specialty alloys rose 22%, ceramics were up 12%, and titanium alloys were up 60%. Stainless steel, on the other hand, was down 9%.

Slicing the onion a little differently, we see that sales to aerospace were up 44%, sales to the medical industry were up 63%, auto sales were up 1%, sales to the power market were up 20% (if you exclude a divestiture from year-ago results), and sales to consumer and industrial customers were down 7% and 12%, respectively, as the company backed away from less-profitable business.

All this and better margins, too. The company improved both the gross and operating margin, and reported net income was up 32%. Continuing the good news, free cash flow is trending up through the first six months. While inventories rose by almost a quarter, some of that is due to the need to service increasing order flow, and some of it is due to higher values on the materials in inventory.

No doubt these are good times for companies like Carpenter and peers/rivals such as AlleghenyTechnologies (NYSE:ATI), Titanium Metals (NYSE:TIE), RTI International (NYSE:RTI), and privately held Special Metals. Demand from aerospace and military customers such as Boeing (NYSE:BA) and Lockheed (NYSE:LMT) has been growing, and there are increasing uses of specialty metal formulations in a wide range of applications.

The trick, of course, is figuring out how much is left in the stock price. It's true that Carpenter has pushed through price increases, but it's also true that investors have pushed up the sector. Even Carpenter's CEO acknowledges that it's tough to do M&A these days because things look so expensive. Consequently, while I think Carpenter could still be years away from peak earnings, the risk/reward ratio here isn't enough in my favor to entice me to buy today.

For more metal mayhem:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).