We started the month of December with the National Bureau of Economic Research officially declaring that the recession we are currently in started in December 2007. The Dow reacted with a massive 679.95 points or 7.7% sell-off, only to recover most of that drop over the next two trading session. The crazy volatility we have been experiencing is very much alive and well. At this point, the current recession is already longer than the 8 month recessions we experienced in 2001 and 1990/1991. The interesting thing about this declaration is that if we consider the classic definition of a recession, which is two quarters of negative GDP growth, we are still not in a recession. Second quarter 2008 GDP increased 2.8% before falling 0.5% in the third quarter. Quite clearly the official version has gotten it right and many stocks like Emerson Electric (EMR) and Precision Castparts (PCP) in the cyclical Industrial sector started falling last December.

In this environment, I am sure that the last thing the majority of you want me to discuss is even more stocks. But instead of participating in the doom and gloom (I already went into that in great detail in the December newsletter), for those you who still have capital and are still bargain hunting, a company that a subscriber brought to my attention recently is worth sharing with all of you.

A couple of weeks ago, a subscriber who has periodically been in touch with me since the early days of SINLetter, wanted to know my thoughts about Portland, Oregon based Precision Castparts (PCP). My short response to him was,

"I just got a chance to review PCP and without digging in deep about future business potential, the company looks awesome. The balance sheet is strong, there is little debt (not sure about the $376.4 million in other liabilities though), operating margins are awesome considering gross margins are under 30%, operating cash flow is off the charts and there have been small insider purchases. "

I decided to dig in deeper and like what I see. Precision Castparts is a company that creates everything from fasteners to "the world's largest diameter stainless steel, nickel-based superalloy, and titanium components" according to their website. The company primarily services the aerospace, power generation (gas turbine, coal and nuclear) and automotive industry. More than half their revenue (51% to be precise) comes from the aerospace sector, while power generation represents 23% of revenue.