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If there’s one thing investors can make sure of, it’s that the financial markets hate uncertainty. Geopolitical turmoil can wreak havoc on large-cap stocks generally, but there’s one sector that might actually profit when tensions flare.
Recent events function a harsh reminder that clashes can erupt all of sudden and at any given moment. This puts the aerospace and defense sector into sharp focus and will signal buying opportunities for responsive investors.
At the identical time, the concept isn’t to leap headfirst right into a trade without taking the time to conduct your due diligence on aerospace and defense stocks. In any sector, there are many mediocre businesses and only just a few real standouts. With a selective mindset and a focus to value and income generation, let’s take a more in-depth have a look at two standby picks for troubling times.
RTX Corporation (NYSE:RTX)
You most likely know RTX Corporation higher as Raytheon Technologies, an American aerospace and defense giant that’s been around in a single form or one other because the Thirties. The corporate is a go-to source for defense technology for the U.S. government, and also you’d be hard-pressed to search out a better-capitalized client than Uncle Sam.
Actually, the U.S. military isn’t the one government entity RTX serves. This month, Raytheon U.K. is about to receive, test and integrate a high-energy laser weapon system. This method is designed to “stop aerial threats comparable to unmanned aerial vehicles.”
But again, RTX’s bread and butter is its contracts with the U.S. government. Just up to now month, RTX has announced quite a lot of value-added developments related to the American armed forces:
- A contract from the National Oceanic and Atmospheric Administration to develop and optimize America’s water-resources prediction capabilities
- Successful operation of a “solid-state circuit breaker to support hybrid-electric propulsion systems in future aircraft” under a NASA contract
- A contract to develop an “air-breathing propulsion demonstration program that uses a novel rotating detonation engine” for the Defense Advanced Research Projects Agency
- A $39 million award from the Air Force to develop and integrate “Battle Management Command and Control software right into a prototype for air base air defense”
- Selection by Boeing (NYSE:BA) to collaborate on the X-66A jet flight demonstrator, which is an element of NASA’s Sustainable Flight Demonstrator project
As you may see, RTX has loads of business from the general public sector. Yet, the corporate has been completely abandoned on Wall Street, with RTX stock losing significant value year-to-date.
As of this past weekend, RTX has a not-too-lofty P/E ratio of 18.51 and paid a forward annual dividend yield of three.38%. Thus, there’s something here to appeal to value seekers and income-focused investors alike. As well as, RTX stock’s five-year monthly beta of 0.73 means it has historically tended to maneuver more slowly than the S&P 500; this could appeal to volatility-averse investors at a time when the world feels quite volatile.
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Lockheed Martin (NYSE:LMT)
Like RTX stock, LMT stock is down for the 12 months regardless that Lockheed Martin has lucrative deals with multiple governments. To begin with, Lockheed Martin recently delivered an F-35A Lightning II aircraft to the Royal Danish Air Force and announced a $746.3 million agreement to support Switzerland’s F-35 jet program. Furthermore, so far as American military arrangements are concerned, Lockheed Martin is staying extremely busy:
- A $19.7 million contract to furnish an auxiliary power unit to support the V-22 Osprey aircraft for the U.S. Navy
- A $163.3 million deal to supply components and services for F135 propulsion systems for the Air Force, Marine Corps and other military entities
- A $175.9 million agreement awarded by the Naval Air Systems Command to support the delivery of F-35 jets
- A $22.3 million arrangement to “manufacture and deliver an air-to-ground missile system” for the Army Contracting Command, Redstone Arsenal, Alabama.
- A $305.6 million contract to support the production of F135 propulsion systems for the Navy, Air Force, Marine Corps and other entities.
- Last but definitely not least, a $1.2 billion contract awarded by Strategic Systems Programs, Washington, D.C., to supply “production and deployed systems support” for a Trident II missile program.
Like RTX, Lockheed Martin has been forsaken by the financial markets, and its share price is down for the 12 months. Hence, there’s a robust value proposition here as Lockheed Martin’s P/E ratio of 14.77 looks reasonable; meanwhile, the corporate offers an honest dividend yield of two.97% per 12 months.
Thus, whether you’re concerned with RTX stock, LMT stock or each, you’re encouraged to conduct your due diligence on this pair of picks within the aerospace and defense sector.