Good morning our traders, investors and speculators.
Monday is here and it means our new article is ready for you to be read.
Today "HNFC" talks about the "Aerospace and Defence industries" as well as share thoughts
on the overall sector performance. Also, we have handpicked 3 stocks for you to track.
Check them down below the article...
The ultimate aim of investing in equities is to maximise your wealth and to outperform the various indices to ensure you achieve capital appreciation in your selected stocks. You do your analysis, check the financials on a stock, determine your risk appetite on the selection of equities you wish to invest in. Sometimes however, you come across a sector that is just performing well and you are in the correct place and the correct time. This could be an industry in the news for whatever reason.
With the current global political climate as it is presently, aerospace and defence contractors and their stock prices at the moment are on the rise and is one such sector that currently falls into the aforementioned ‘correct place and correct time’. This is in no shortage to a comment made by Donald Trump who wishes to increase spending on defence in the US by $54 billion dollars during his tenure. This has led to investors and the market looking favourably upon the aerospace and defence sector indicating the good times are still to come for investing in this sector.
In the Aerospace and Defence industry, 90% of the stocks topped earnings and 70% exceeded revenue expectations, in the first two quarters of the year. Undoubtedly, such bullish figures and overall market appreciation would be enough to make any investor curious and optimistic about the sector's improved performance, and with main reasons for these impressive figures still a factor moving forward for the rest of the year with geopolitical pressures every seemingly on the rise and continuing to drive the sector, this could be an industry to continue to watch out for.
With a planned 100,000 troop reduction to the US military this year however, and Trumps increase in the defence budget still not official and merely a wish there has been a sub industry surge by those companies involved with the creation of advanced weapon systems looking to continue an upward trend in the foreseeable future. Looking further into this on Bloomberg (Function SPLC) you can find out the supply chain for a well performing company within the defence industry along with the supplies of the raw materials, find two well performing symbiotic stocks like this and you could be onto a real winner for your capital appreciation targets.
This industry is also seen as inflation and recession proof, as the world’s military powers will always spend money on defence. As well as selecting equities that look like they are good stock picks, make sure to always research the industry they primarily operate, as this can inform a bit clearer on why the stock is performing as it is, or if you have a boom sector you have stumbled upon which could also house further great stock picks for you. The worst industry research can do is make you more informed on an equities competitors within the market. This in addition of course to your initial analysis is paramount before using your own capital.
Picking investment-worthy performers for your portfolio will be a smart move to capitalise on the gains ahead. This is why we recommend you add these defence stocks to your portfolio now.
We have narrowed down our search to these 3 :
The Boeing Co. - Ticker : BA
This company is the largest aircraft manufacturer in the world in terms of revenue, orders and deliveries. It is also one of the largest aerospace and defence contractors.
Boeing currently is projecting growth for the next five years 13%.
Moreover, the company's stock has surged 54% on a year-to-date basis, outperforming the broader industry's gain of 28.2%.
Spirit Aerosystems Holdings, Inc. – Ticker: SPR
This company is the world's largest independent supplier of commercial airplane assemblies
Spirit Aerosystems' projected growth for the next five years is 10.8%. Its Zacks Consensus Estimate for the current-year earnings climbed 8.3% over the last 30 days. The company currently carries a buy opinion from other analysts within the industry with a score of 4, which can be found on the ANR function on the Bloomberg terminal.
Further, the company's stock has rallied 27.7% on a year-to-date basis, outperforming the broader industry's gain of 22.1%.
Raytheon Co. – Ticker: RTN
This is one of the largest aerospace and defence companies in the United States with a diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services.
The company's stock has rallied 28.2% on a year-to-date basis, outperforming the broader industry's gain of 22.1%.
In addition to the 3 recommendations made above, here are a list of 20 equities that fall under the aerospace and defence banner, and for fun I added them all together into a portfolio to track the 1 year return on the selection of aerospace and defence stocks ran on the Bloomberg function (PORT) (all equities were given equal weighting) was an excellent return of 39.45%.
Finally, always ensure the stocks you choose for your portfolio are ethical for you as an investor
and are an industry you feel comfortable investing in. Always ensure you have an asset allocation plan and list down the industries you wish to avoid. This will also give you an indication of where you wish to see your capital invested and what industries garner your interest or other financial instruments such as forex or as discussed in last week’s blog post of bonds or exchange traded funds (ETF’s).
Thank you for your time.
We would be very grateful for your feedback, feel free to ask any questions down the section below.
If you enjoyed reading the article please share it with your friends. Your support means a lot to us.
Written by Graham Laxton │Young financial analyst and Co-founder of HNFC
Edited by Vee Venski
This article is not a promotion of financial investment. Investing money in financial instruments is risk-reward process. Losses and gains are part of financial investment process. Only invest money you can afford to lose.