TransDigm Group Incorporated (NYSE: TDG)

TransDigm Group is a highly acquisitive aerospace components manufacturer known for its proprietary, sole-source products and aggressive pricing strategy. The company produces niche components—latches, actuators, ignition systems, pumps—that are critical to aircraft operation but represent a tiny fraction of total aircraft cost. TransDigm's portfolio includes over 90% sole-source products, meaning there is no alternative supplier for most of what it sells.

TransDigm earns revenue from the sale of proprietary aerospace components, with a significant aftermarket business that carries margins exceeding 50%. The sole-source nature of its products gives the company extraordinary pricing power, particularly in the aftermarket where switching costs are prohibitive.

TransDigm was founded in 1993 by Nick Howley and Doug Peacock with the acquisition of a single aerospace components business. The company has completed over 90 acquisitions, each following the same playbook: buy niche sole-source aerospace parts makers and optimize pricing. TransDigm went public in 2006 and has been one of the best-performing industrial stocks since.