Three Aerospace Stocks to Buy as They Climb 05/21/2024 | | | AI stocks are soaring. And so are cryptos.
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The three aerospace stocks to buy should rise further due to growing demand for defense and aerospace products and parts. Investors seeking to profit may find aerospace has tailwinds in its favor.
For example, demand in the United States is on the rise due to its national security doctrine that seeks to use military modernization to deter adversaries, while European countries' NATO budgets are increasing to keep the countries in good standing with the alliance, according to a recent research report by Citigroup. Demand for defense-related aerospace products and parts is jumping with Russia's war against Ukraine and the Middle East fighting between Israel and Hamas in Gaza.
Three Aerospace Stocks to Buy as Backlog Builds
Company backlogs have grown 15% in the past three years and support the view that industry growth is projected at 5%, Citigroup wrote. Profit margins are likely to expand as new bookings reflect the current cost and supply chain environment, Citigroup continued.
"Look to invest in companies with accelerating revenue growth and margin expansion," the report continued.
Bob Carlson, a former pension fund chairman who heads the Retirement Watch investment newsletter, said several exchange-traded funds (ETFs) focus on the aerospace and defense sector. The funds could serve as an alternative to the three aerospace stocks to purchase, he added.
Bob Carlson, who heads Retirement Watch, answers questions from Paul Dykewicz.
Three Aerospace Stocks to Buy as They Climb: TransDigm Group (TDG)
TransDigm Group Incorporated (NYSE: TDG), a Cleveland-based global designer, producer and supplier of highly engineered aircraft components, is gaining strength from rising demand in the defense industry. The result is that the company beat consensus analysts' estimates and raised its guidance after its latest earnings report on Tuesday, May 7.
The company's commercial aftermarket growth rate slowed a bit to 8% in the second quarter from 25% in the first quarter due to a decline in freight revenue, while passenger transport remained strong, wrote Louie DiPalma, an aerospace and defense analyst with Chicago-based William Blair & Co.
TransDigm's management reiterated its outlook for 15% commercial aftermarket revenue growth, implying a reacceleration in the second half, DiPalma wrote. The company's management indicated that aftermarket demand remains robust.
Three Aerospace Stocks to Buy as They Climb: 'Long Runway' Remains
Company leaders forecast a "long runway for growth" as demand for travel climbs, surpassing pre-pandemic levels for the first time, DiPalma continued. Defense revenue showed strength in the last quarter, outperforming expectations on improved defense outlays, he added.
TransDigm raised its full-year outlook for consolidated revenue and earnings before interest, taxes, depreciation and amortization (EBITDA), reflecting the outperformance in the defense market, DiPalma wrote.
"We expect that depressed aircraft production over the past three years, combined with revenge travel, will result in an aviation aftermarket supercycle for the next decade," DiPalma continued. "Airlines will continue to extend the lives of aging aircraft with spare parts to accommodate the robust travel demand coming out of the pandemic, driving steady growth for the aftermarket parts and services industry. TransDigm has taken advantage of the slowdown in new aircraft deliveries and aging aircraft fleets, which have increasing needs for reliable replacement parts."
The various financial "tailwinds" will support TransDigm's earnings growth and provide upside to its historical valuation, DiPalma wrote. Thus, DiPalma reaffirmed his "outperform" rating on TransDigm.
Chart courtesy of www.stockcharts.com
Three Aerospace Stocks to Buy as They Climb: Curtiss-Wright (CW)
Davidson, N.C.-based Curtiss-Wright (NYSE: CW) lifted off as a company along with Orville and Wilbur Wright's first flight in 1903. Also accompanying them was Glenn Curtiss, regarded as a pioneer of naval aviation. In 1929, the companies founded by the three great aviation innovators led to the creation of Curtiss-Wright Corporation, combining Curtiss Aeroplane and Motor Company and Wright Aeronautical Corporation. At the time of the merger, Curtiss-Wright ranked as the world's largest aircraft company.
Curtiss-Wright focuses on innovation and advanced engineering, while applying capability to key applications in high-performance markets. Curtiss-Wright's management aims to develop long-standing customer relationships to support significant growth and profitability in the markets it serves.
The company's revenues are generated by providing solutions through three segments: Aerospace & Industrial, Defense Electronics and Naval & Power. Those three niches arguably are among the largest and most vital industries in the world right now. | | | If investors act fast enough, they can LOCK IN a regular source of extra income with annual returns as high as 11.1%, guaranteed for life. That's 761% greater than the average dividend of an S&P 500 stock).
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Curtiss-Wright recently announced a $300 million increase to its share-repurchase program, bringing its total authorization to $400 million. The company also declared a 5% increase to its quarterly dividend to $0.21 per share. Curtiss-Wright has repurchased more than $450 million of shares since 2021.
Curtiss-Wright hosted an investor day in New York City on May 21. The company to update its long-term organic growth strategy and introduced three-year financial targets with growth assumptions by end-market.
William Blair forecasts mid-single-digit consolidated revenue growth through 2027 for CW. The investment firm also projects operating margin to expand from 17.4% in 2023 to 17.8% in 2026.
Chart courtesy of www.stockcharts.com
Three Aerospace Stocks to Buy as They Climb: Teledyne Technologies (TDY)
Teledyne Technologies (NYSE: TDY), of Thousand Oaks, California, provides enabling technologies for industrial growth markets that require advanced technology and high reliability. The markets include aerospace and defense, factory automation, air and water quality environmental monitoring, electronics design and development, oceanographic research, deepwater oil and gas exploration and production, medical imaging and pharmaceutical research.
Chart courtesy of www.stockcharts.com
Key products include digital imaging sensors, cameras and systems within the visible, infrared and X-ray spectra, monitoring and control instrumentation for marine and environmental applications, harsh environment interconnects, electronic test and measurement equipment, aircraft information management systems, and defense electronics and satellite communication subsystems. Plus, Teledyne Technologies supplies engineered systems for defense, space, environmental and energy applications.
Michelle Connell, who heads Portia Capital in Dallas, is a fan of Teledyne Technologies, partly due to its growth and strategic product niches. On average, the upside for the next 12 to 18 months is 20%, Connell forecast.
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The head prosecutor of the world's top war crimes court announced on Monday, May 20, that he is seeking arrest warrants for top leaders of Israel and Hamas for "crimes" committed during their ongoing seven-month war. Named were Israeli Prime Minister Benjamin Netanyahu, his Defense Minister Yoav Gallant and Hamas leaders Yehia Sinwar, Mohammed Deif and Ismail Haniyeh. Each is accused of war crimes, along with crimes against humanity, in Gaza and Israel.
Netanyahu called the prosecutor's accusations against him a "disgrace," and an attack on the Israeli military and all of Israel. He vowed to press ahead with Israel's war against Hamas and expressed unwavering resolve to free the hostages taken during an Oct. 7 attack against Israel.
Israel is continuing its efforts to find and destroy an extensive tunnel system in neighboring Gaza that has been used to stockpile weapons, as well as hide the Hamas leaders and militants who were responsible for the Oct. 7 attack that killed an estimated 1,200 people and took 240 hostages into Gaza.
But the Gaza Ministry of Health estimates that a total of more than 35,000 Hamas fighters and civilians have lost their lives there since the war began Oct. 7.
President Biden issued a statement describing the ICC prosecutor's application for arrest warrants against Israeli leaders as outrageous.
"Whatever this prosecutor might imply, there is no equivalence — none — between Israel and Hamas," Biden said in his statement. "We will always stand with Israel against threats to its security."
Russia Maintains Death March in Ukraine
Russian forces penetrated the border area near Kharkiv, Ukraine's second largest city.
They have since gained control of a number of villages on Ukraine's northeastern section, while trying to advance further against Ukraine's outnumbered and outgunned forces.
Russia's leaders have adopted a "meat grinder" war strategy of sending overwhelming waves of soldiers forward to wear down Ukrainian forces and expose their locations to Russian artillery waiting to kill as many of the defenders as possible. An overall death toll of more than 50,000, estimated by the BBC, is eight times higher than the only official public acknowledgement of fatality numbers released by Russia in September 2022.
The three aerospace stocks to buy as they climb toward the sky look to have rising demand amid ongoing wars and increased travel. Investors seeking to profit may choose to seize those opportunities while they still seem to have plenty of thrust to rise further. | | | Sincerely,
Paul Dykewicz, Editor
StockInvestor.com
| | About Paul Dykewicz: Paul Dykewicz is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul also is the author of an inspirational book, "Holy Smokes! Golden Guidance from Notre Dame's Championship Chaplain", with a foreword by former national championship-winning football coach Lou Holtz. Follow Paul on Twitter @PaulDykewicz. | | | | | |
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