Top Aerospace & Defense Stocks • Daily Updated Charts • Benzinga
In February and March 2020, aerospace and defense stocks were in freefall. Suddenly, instead of symbolizing the speed and connectivity of the modern economy, airports around the world have become ghost towns. Likewise, many seething geopolitical rivalries have faded as the international community has focused on tackling the threat of the coronavirus. Now that much of the world has returned to some semblance of normality, air travel is up significantly from its 2020 lows, according to data from the US Bureau of Transportation Statistics. Moreover, earlier geopolitical rivalries have erupted again, encouraging military spending. Below are the top aerospace and defense stocks to watch this year.
A look at the best aerospace and defense stocks
- Lockheed Martin
- General dynamics
Thanks to the intersection of national security interests and the pursuit of economic competition, top aerospace and defense stocks have historically provided an excellent arena for buy and hold investors to grow their portfolios. Unfortunately, the COVID-19 crisis has proven that very few sectors can avoid the initial volatility associated with a once-in-a-century pandemic.
Nevertheless, the US and global community came together to manufacture and distribute a vaccine in record time. With the return to normal comes economic opportunity, as well as a resurgence of old rivalries, both of which bode cynically well for aerospace and defense stocks.
Overview: Aerospace and Defense Stock
As one of the most competitive and lucrative market segments, aerospace and defense stocks basically offer investors a double dose of profit potential. First, the aerospace industry has transformed the 20e century, allowing people to travel great distances at unprecedented speed. As we move up the technology spectrum of this century, aerospace companies are aiming even higher. For example, experts estimate that space tourism will become a $1.57 billion industry by 2028.
Second, investors can easily capitalize on the relevance of the defense component of the aerospace market. No matter how humanity progresses, conflict seems inevitable – and there can be a lot of it. As the world’s sole superpower, the United States has a unique responsibility to project its power and deter opposing or belligerent actors from undermining American interests and those of its allies.
Additionally, due to a power transition in Washington, DC, and the dramatic shift in leadership culture, a few nations appear to be testing the Biden administration. Therefore, it is possible that defense spending will rise to counter these high profile shenanigans, which bodes well for aerospace and defense stocks. Additionally, Deloitte reports that U.S. allies such as Japan are boosting their security profile, potentially providing additional revenue streams for U.S. defense contractors.
Finally, the COVID-19 crisis initially imposed what appeared to be crippling volatility among aerospace and defense stocks. Logically, with billions of people around the world virtually forced into quarantine, planes were parked on the tarmacs. Not only was this devastating for commercial airliners, but the aerospace industry suffered severe losses in product and service revenue. However, with the return of consumers wanting to make up for lost time, this sector could experience a revival.
Best Online Brokers for Aerospace and Defense Stocks
While you can find a few exceptions to the rule, aerospace and defense stocks tend to be well-capitalized, deeply established blue-chip names. Given the complex nature of the business, as well as its critical profile, the industry presents a high barrier to entry. Therefore, you usually don’t have to worry about an upstart competitor ruining your wallet.
Moreover, this hard-to-break market allows you to freely choose your online broker according to your lifestyle and preferences. Since the top aerospace and defense stocks on this list are mostly household names, any brokerage will carry their equity stakes. To help you decide, here are the best online brokers for the aerospace and defense industry.
Claim exclusive offers
Long term investors
Refer friends and get FREE stock
Active and global traders
Intermediate Traders and Investors
Benzinga is compensated if you access certain of the products or services offered by eToro USA LLC and/or eToro USA Securities Inc. The testimonials contained in this communication may not be representative of the experiences of other eToro customers and such testimonials are not no guarantees for the future. performance or success.
Features To Look For In Aerospace & Defense Stocks
- Balanced pipeline: When evaluating aerospace and defense stocks, the latter part invariably attracts the most attraction – fighter jets simply offer more pizzazz than commercial airliners. Nevertheless, the most successful companies in this sector have struck a healthy balance between commercial and military applications. This balance may become even more important in the future, as defense budgets may come under pressure from budgetary and political headwinds.
- Assessment: In the defense industry, there is no greater honor than customer loyalty. If particular weapons and security systems work well, military and government agencies will continue to request them. Similarly, if commercial aerospace entities consistently satisfy consumers and customers, they will also ensure customer loyalty. Therefore, when determining which aerospace and defense stocks to buy, consider a heftier allocation to companies with strong track records and brand reputations.
- Strong finances: While financial strength is an attribute investors should consider for any category in the equity sector, it is particularly important for aerospace and defense stocks. For one thing, this market sub-segment is capital-intensive. Second, no one knows for sure how the COVID-19 pandemic will ultimately unfold. For example, consumer fears could persist, which could pose business challenges. But companies with strong balance sheets can bear the pain longer than others.
Fly through friendly (and hostile) skies for serious payouts
In many ways, aerospace and defense stocks represent an intriguing contradiction. Invariably, the defense component attracts a lot of controversy due to the deadly effectiveness of its underlying products. On the other hand, military innovations have a propensity to improve civilian applications.
From an investor’s perspective, aerospace and defense stocks offer a 2-to-1 approach. During bull markets, the aerospace component enjoys significant demand as people travel around the world. In times of geopolitical tension, the defensive angle can hedge an investor’s portfolio against certain risks. Therefore, this sector is still worth considering.
Frequently Asked Questions
What are aerospace and defense stocks?
Aerospace and defense stocks are stocks of companies in the aviation or defense sectors.
Are aerospace and defense stocks a good investment?
Because the airline industry is making a comeback, aerospace and defense stocks are seen as a good investment.
What are the best aerospace and defense stocks?
Check out Benzinga’s list above which outlines the best aerospace and defense stocks.