1. TransDigm Group Incorporated (NYSE:TDG)
Number of Hedge Fund Holders: 78
TransDigm Group Incorporated (NYSE:TDG) is an American aerospace company headquartered in Cleveland that manufactures engineered aircraft components, such as avionics, pumps, and valves. It is the best aerospace and defense stock to buy right now, according to Insider Monkey’s database with 78 hedge funds bullish on the company, with their stakes collectively amounting to $6.62 billion. Mark Massey’s AltaRock Partners is the largest stakeholder among hedge funds in the company.
During the second quarter of the year, the company reported an EPS of $7.99, smashing estimates of $7.42 per share. President and Chief Executive Officer, Kevin Stein, credited the strong results in the quarter to the global commercial aviation trends, as the industry continues to recover and return to normalization amid an increase in demand for air travel. He also believes that there is much progress to be made ahead as OEM aircraft production rates are still well below the pre-pandemic levels.
Investors are optimistic about the growth prospects of TransDigm Group Incorporated (NYSE:TDG) as well. ClearBridge Global Growth Strategy stated the following in its first quarter 2024 investor letter:
U.S. aircraft parts manufacturer TransDigm Group Incorporated (NYSE:TDG) was our largest addition. TransDigm is a steady compounder with strong pricing power coming from regulatory barriers that limit the number of competitors and due to its proprietary intellectual property, which makes it a sole supplier of many certified aircraft parts. We believe the company will see long-term duration of growth ahead as it benefits from the expansion of the aerospace aftermarket and acquisitions in this still-fragmented space.
Moreover, there is consensus among analysts about the stock’s Buy rating, backed by an average share price target of $1,384, which is an upside of 11.5% from its current value. The price adjustments reflect recent developments such as the Calspan unit divestiture, acquisition of Raptor Scientific, and cash buy of CPI’s Electron Device Business, which are set to bolster TransDigm Group Incorporated (NYSE:TDG)’s financial outlook.
While we acknowledge the potential of aerospace and defense companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TransDigm Group but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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