10 Best Aerospace and Defense Stocks to Buy Now

2. RTX Corporation (NYSE:RTX)

Number of Hedge Fund Holders: 62

Formerly known as Raytheon, RTX Corporation (NYSE:RTX) is a giant in the global aerospace and defense industry. The company’s products generally complement Lockheed Martin’s offerings, such as preparing missiles for Lockheed’s fighters to ensure they remain a lethal threat. Since the beginning of the Ukraine war in February 2022, the stock’s share price has grown by over 15% due to a high demand for its weapons.

The ongoing conflicts in Europe and the Middle East have led to a robust first quarter of the year for RTX Corporation (NYSE:RTX), with sales increasing 12% compared to last year, to a total of $19.3 billion, and EPS posted at $1.34 per share, which is 10% higher YoY. The company has reaffirmed its forecasts for the full financial year, where it expects total revenue between $78-79 billion, and an EPS in the range of $5.25 – $5.40. According to Insider Monkey, 62 hedge funds are bullish on the company, making it one of the best aerospace and defense stocks to buy now.

Some investors, however, hold a bearish view of RTX Corporation (NYSE:RTX) after its aerospace subsidiary Pratt & Whitney discovered last year that several parts of its engine turbine discs were made using contaminated powder that makes metal parts susceptible to cracks and erosions. The management estimated a $3 billion pre-tax hit to cash flows between 2023 and 2025, but there was essentially no charge incurred in 2023, and the amount is now set to hit its numbers in 2024, 2025, and 2026.

Having said that, while headwinds undoubtedly exist, 2025 or 2026 is not the end of the road for RTX Corporation (NYSE:RTX). A major reason that speaks to the bull case for the company is its impressive backlog of $196 billion, of which $78 billion comprises defense-related orders, including a $2.8 billion guided-missile order by NATO. Most industry analysts have mixed views on the stock’s ratings, which range between hold to buy, with an average share price target of $102 at an upside of 0.4%.