Hexcel Corporation (HXL): A Bull Case Theory

We came across a bullish thesis on Hexcel Corporation on Valueinvestorsclub.com by ElCid. In this article, we will summarize the bulls’ thesis on HXL. Hexcel Corporation's share was trading at $72.66 as of December 17th. HXL’s trailing and forward P/E were 85.07 and 28.82 respectively according to Yahoo Finance.

Hexcel Corporation (HXL) is a leading producer of carbon fiber composites, materials that are stronger, lighter, and more durable than aluminum, making them ideal for aerospace, defense, and high-end industrial applications. The company is vertically integrated, producing key inputs like polyacrylonitrile (PAN), carbon fibers, resins, adhesives, prepregs, and structural components, with a significant portion of its output used internally.

Its two main segments, Composite Materials (80% of sales) and Engineered Products (20%), serve Commercial Aerospace, Space & Defense, and Industrial markets, with Airbus and Boeing representing the largest customers. Hexcel’s carbon fiber is used across both primary and secondary aircraft structures, with widebody planes relying more heavily on its lightweight properties for fuel efficiency. Long-term master contracts with airframers lock in pricing, allow pass-through of commodity costs, and create sticky, largely sole-sourced customer relationships, providing stable margins.

Despite a seemingly stretched multiple, Hexcel’s earnings are depressed by persistent supply chain and airframer issues, which have slowed aircraft production. The market has largely priced in prolonged weakness, creating a potential mispricing opportunity. Industry insights suggest supply chain chokepoints are being resolved, setting the stage for a substantial ramp in aircraft production—projected at +70% over the next 3–5 years—while carbon fiber continues to gain share in both current and next-generation aircraft programs.

Hexcel’s oligopolistic position, technological know-how, and long-term customer relationships make it a durable business with strong growth potential. Additional upside could come from stabilization in the aerospace supply chain, ramping Airbus A350 and 777 volumes, and developments on the next-generation Boeing 737 narrowbody. Historically, Hexcel has also been considered a potential takeover target, adding optionality for investors. Overall, the company offers an attractive risk/reward profile with significant upside if aircraft production normalizes.

Previously we covered a bullish thesis on TransDigm Group Incorporated (TDG) by Summit Stocks in May 2025, which highlighted its dominant aerospace components, strong pricing power, and recurring aftermarket revenues. The company's stock price has depreciated by 10.21% since our coverage due to near-term supply chain issues. The thesis still stands as TDG’s structural advantages remain compelling. ElCid shares a similar perspective on Hexcel but emphasizes growth from carbon fiber adoption and aircraft production ramps.

Hexcel Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held HXL at the end of the third quarter which was 28 in the previous quarter. While we acknowledge the potential of HXL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.