I piloted my first successful helicopter takeoff about 20 years ago, in a Bell Long Ranger while attending the Bell Helicopter Training Academy in Fort Worth, Texas.

I must have had a smug, self-satisfied look on my face, because my pilot instructor pointedly said: “You can’t propel yourself forward by patting yourself on the back.”

I’ve been reminded of those words lately, as the bull market persists in defying gravity. There’s another way to express my instructor’s warning: past performance is no guarantee of future results.

As the major U.S. stock market indices hover at record highs, cockiness is starting to creep into Wall Street’s sentiment. Don’t pat yourself on the back for your gains so far this year. It’s time to add some “defensive growth” to your portfolio.

Portfolio hedges sometimes come in unlikely forms. Below, I pinpoint a stock that confers outsized growth potential, protection against a downturn, and even a hedge against inflation. And it’s a bargain, to boot.

Chances are, you’ve never head of the company. It’s in the aviation sector and it’s a play on the sector’s rebound from COVID-induced economic damage.

As I’ve noted in previous articles, one shrewd move now is to consider high-quality stocks in the booming aerospace/defense sector.

Read This Story: Defense Stocks: A Bigger Bang For Your Buck

Several military aviation stocks are poised to not only outperform but also weather any turbulence ahead. Today, I spotlight a hybrid aviation stock with a global presence in both the commercial and military sectors. It’s a technology play, too.

Come fly with me…

If you’re a regular reader of this newsletter, you know that I love to fly helicopters. That’s a picture of me in the cockpit of a Sikorsky Schweitzer 330, about to take off.

I understand a thing or two about aviation, so believe me when I tell you that the following stock is one of the best growth stories around: AAR (NYSE: AIR), a provider of maintenance, repair and overhaul (MRO) services to operators and manufacturers of rotorcraft and fixed-wing airplanes.

Aerospace is in the ascendancy again, but many of the industry’s well-known names offer limited upside. AAR, on the other hand, is set for the sort of market-beating gains that its more famous peers would envy.

AAR’s stock has been on a tear over the past 12 months, gaining 80.3% compared to 34.2% for the S&P 500, but the price has slipped since late summer due to uncertainty over the Delta strain of COVID. Now’s the time to scoop up shares, on the dip.

AAR’s earnings growth projections are exceptional. And yet, the company scarcely gets a mention on CNBC and the other television noise machines. Mechanics in dirty overalls are perhaps considered too boring a topic, but it’s these boring wrench turners on the ground who keep aircraft in the air.

Headquartered in Wood Dale, Illinois, AAR boasts a vast global footprint and ranks as the biggest independent MRO provider in the U.S. by annual man-hours generated.

With a market cap of $1.2 billion, AAR is the largest, publicly traded direct play on MRO growth. However, it’s still small enough to offer greater capital appreciation potential than the gigantic aerospace companies on its client roster.

AAR is something of a rarity. Most major OEMs and airlines have created in-house MRO shops, but AAR is an independent MRO that combines the technological innovation and nimbleness of a small-cap company, with sufficient economies of scale to keep down its costs.

Powerful tailwinds…

AAR enjoys tailwinds from aerospace growth in the commercial, business and military sectors. The company operates in two segments, Aviation Services and Expeditionary Services.

The Aviation Services segment offers aftermarket support, inventory management, and distribution services.

The Expeditionary Services segment provides products and services supporting the movement of equipment and personnel by the U.S. Department of Defense, foreign governments, and non-governmental organizations.

Demand for MRO is particularly strong these days, as air travel recovers from its slump. Air carriers are generating healthy operating revenue again. Take a look at the following chart:

COVID Delta provided a temporarily headwind in recent months for AAR and the aviation sector. Accordingly, third-quarter revenue and earnings for the major air carriers have been a mixed bag.

However, pandemic infections are markedly declining again and consumers with cabin fever are once again booking trips. The global economic recovery remains on track and it’s prompting consumers to open their wallets for plane tickets and airlines are dipping into their coffers to make long-deferred repairs and upgrades.

At the same time, a huge surge in global military spending should benefit AAR. The company’s major clients include Boeing (NYSE: BA), the world’s largest maker of commercial airliners and military planes. Domestic and international airlines are clients as well.

As stocks in highly cyclical sectors gyrate according to the latest economic data or political crisis, AAR over the long term has been a “steady Eddy” performer. The equation is simple: without this company’s services, aircraft can’t fly.

Defense spending remains massive and it’s on a long-term upward trajectory, which shields companies such as AAR from temporary economic downturns and market setbacks. Consistently high Pentagon spending also provides insurance against inflation, which after a long period of dormancy has been rattling its cage again.

The average analyst expectation is that AAR’s year-over-year earnings growth will reach 77.4% in the current quarter, 75.7% next quarter, 83.2% in the current year, and 28.3% next year.

However, with a forward 12-month price-to-earnings ratio (FPER) of 14.1, AAR’s stock is a bargain compared to the FPER of the aerospace/defense industry (20) and the S&P 500 (21.3).

Got any questions or comments? I’d especially like to know how you’ve fared with my recommended trades. Share your stories: mailbag@investingdaily.com.

If you’re looking for a stock that’s not tied to the sometimes volatile aviation sector, consider a tech play recently unearthed by our investment team that’s positioned to crush the broader market. To learn the details about this investment opportunity, click here now.

John Persinos is the editorial director of Investing Daily. Subscribe to his video channel.