Before the long holiday week ahead, I wanted to update you quickly on recent developments with 2 PeakStocks.com portfolio picks: AAR Corp. (NYSE: AIR), and uWink, Inc. (Nasdaq: UWKI.OB).

AIR’s Earnings Keep Soaring:

AAR Corp. just reported second quarter fiscal 2008 earnings after the market’s close on Tuesday, December 18th.

Although you might be angry with the kid kicking your seat when you travel over the next week or so, you won’t be at all disappointed with AAR’s earnings.

I’ll give a more detailed breakdown of AAR Corp.’s earnings as well as detail the conference call highlights in a later post, but I wanted to provide some quick numbers (growth from previous year’s 2Q/analysts estimates where applicable):

• Record quarterly sales of $310.6 million (up 27% from prior year/vs. $307.3 million projected)
• Record quarterly income from continuing operations of $17.9 million (up 28% from prior year)
• Gross margin improves to 19.4% (up from 18.8% from prior year)
• Operating margin improves to 10.1% (up from 9.1% prior year)
• $0.42 earnings per share (up 27% from prior year/ vs. $.40 projected)

There were also some interesting highlights in the quarter:

• AAR is getting more and more Maintenance, Repair and Overhaul (MRO) business from airlines.

AAR saves airlines money because maintenance and repair is part of its core business and its employees work faster and more efficiently. In addition, airlines have been outsourcing their maintenance and repair to aviation service providers like AAR, which are able to provide the same services at lower costs by using non-union employees and lowering overhead costs.

“The principal markets we serve - commercial, aviation and defense - continued to expand, despite the turbulence in the global credit markets, uncertainty in the U.S. economy and continued pressure from high fuel prices. The demand from airlines for outsourced technical services and additional aircraft lift is strong, as are the opportunities to support the U.S. Department of Defense and its allies,” said David P. Storch, Chairman and Chief Executive Officer of AAR CORP. “During the quarter the AAR team made excellent progress penetrating and growing our presence in these markets. We experienced significant sales growth and margin improvement in our MRO business; continued strength in Aviation Supply Chain; steady progress in our Structures and Systems business; and solid growth in our Aircraft Sales and Leasing business.”

• Sales to commercial customers increased 29%, and sales to defense customers grew 24%, year-over-year. This is a great balance for AAR.

• In addition, AAR purchased 272,000 shares of its stock on the open market through the first six months of fiscal 2008 at an average acquisition price of $29.98.

This is right around where my initial buy recommendation and re-recommendation prices were set. It looks like AAR also thinks their stock is cheap at these levels!

• On December 3, 2007, the AAR completed the acquisition of Summa Technology, Inc., a leading provider of high-end sub-systems and precision machining, fabrication, welding and engineering services located in Huntsville, Alabama.

“We are very excited to add the extensive capabilities of Summa and its management team to our company,” said Storch. “Summa has great momentum and is performing well, and we look forward to creating even more opportunities as we integrate it with our other businesses.”

AIR still a buy

While no longer “cheap”, AAR Corp. is still a great company to own for long term investors. While the stock price has risen considerably since my initial recommendations, it is still a good value at these levels and I would still recommend a small purchase of shares here while looking to add more on weakness.

In a future post, I will detail the company’s earnings as well as their investor conference call, and update the company outlook in my AAR research report on my website.

Read my initial buy recommendation and full report on AAR Corp.

Variables You Should Know:
Risk Rating:	5 (Average)
Position Size:	1/2 (as of 10-22-07)
Buy Around Price:	$30.00

uWink Updates Restaurant Openings

uWink updated the status of their potential restaurant openings after the market closed on Friday, December 21st.

The not-so-good-news

On December 4, 2007, uWink terminated its lease agreement relating to the opening of a new restaurant location at the Promenade at Howard Hughes Center in Los Angeles, California.

The termination was as a result of certain permitting delays relating to the Center’s conditional use permit that prevented the opening of the restaurant within the timelines provided for in the definitive lease agreement.

Moreover, uWink has determined not to pursue a renegotiation of the terms of this lease because the they intend to focus on less capital intensive real estate opportunities as uWink executes on the growth plan for its uWink branded restaurants.

uWink incurred no termination penalties in this deal, and to be honest, if uWink felt that their risk/reward proposition as well as value proposition, was compromised by continuing with the opening of a uWink at the Howard Hughes Center, then by all means save that expense and use it for a better location with a much higher return on investment.

This is just a small bump in the road for uWink, and I’m sure it won’t hurt their expansion plans at all as they still intend to open 2-3 locations in 2008, and possibly more.

The good news

In the same announcement, uWink said that on December 17, 2007, they entered into a definitive lease agreement to open a new restaurant location at the Hollywood & Highland Center in Hollywood, California.

In addition, uWink signed a definitive agreement to purchase certain assets of the restaurant that had formerly occupied the space to be taken by uWink.

Assuming that all the proper permits are in place and nothing comes up, the new uWink restaurant is expected to open in April 2008.

This will mark uWink’s 2nd location, with a 3rd coming along in Mountain View, California also around this time. Stay tuned for news and updates on that location.

Read my initial buy recommendation and full report on uWink.

Variables You Should Know:
Risk Rating:	10+ (Highest Possible Risk)
Position Size:	1/2 Total: (1/4 on 11-23-07, 1/4 on 12-6-07)
Buy Around Price:	$1.80 (11-23-07), $1.85 (12-6-07)