10 Best Large Cap Defense Stocks to Buy Now

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1. RTX Corporation (NYSE:RTX)

Market Cap: $163.07 billion

Number of Hedge Fund Holders: 72

RTX Corporation (NYSE:RTX) is a giant in the global aerospace and defense industry. It provides systems and services to commercial, military, and government clients. It operates through three main businesses: Collins Aerospace, Pratt & Whitney, and Raytheon.

The company continues to receive high-value defense contracts, which has made it an attractive stock for investors. On January 3, RTX Corporation (NYSE:RTX) was awarded a $946 million contract to supply additional Patriot air and missile defense systems to Romania. The contract is inclusive of radars, missiles, and control stations.

In October last year, RTX Corporation (NYSE:RTX) clinched a $736 million deal from the Navy to produce AIM-9X SIDEWINDER missiles. Later, in December, it won a $590 million production contract – again from the Navy – for the Next Generation Jammer Mid-Band (NGJ-MB) system.

During its Q4 2024 earnings call on January 28, RTX Corporation (NYSE:RTX) reported $21.6 billion in quarterly sales, up 9% compared to last year. Adjusted EPS was logged at $1.54, beating expectations of $1.38 per share. The company ended the year with a backlog of $218 billion, up 11% year-over-year. Moreover, it returned $852 million in capital to shareholders during the quarter.

Investor sentiment around RTX Corporation (NYSE:RTX) remains robust. According to Insider Monkey’s database for Q3 2024, 72 hedge funds held a stake in the company, up from 54 at the end of the second quarter. Longleaf Partners Fund stated the following regarding RTX in its Q4 2024 investor letter:

RTX Corporation (NYSE:RTX) – Aerospace and defense company RTX was a top contributor for the year. Our appraisal value has grown nicely since we first purchased the company just over a year ago. While the issues for Pratt & Whitney’s (P&W) Geared Turbofan engine are still not yet fully fixed, they have gotten better and given us another reminder that the point of maximum pessimism is only obvious in retrospect. We continue to have a conservative valuation on P&W so view this as a source of future value upside. The Raytheon segment has also performed better as the year has gone on, with recent signs of margin improvement. Strong industry tailwinds, prudent capital allocation and a solid balance sheet provide a foundation for sustained growth and eventual full value recognition.

Overall, RTX ranks first among the 10 Best Large Cap Defense Stocks to Buy Now. While we acknowledge the potential of 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 RTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

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