11 Undervalued Aerospace Stocks To Buy According to Hedge Funds

2. Lockheed Martin Corporation (NYSE:LMT)

Forward Price to Earnings Ratio: 18.62

Number of Hedge Fund Holders: 58

Lockheed Martin Corporation (NYSE:LMT) is the largest defense contractor in the world. In fiscal 2023, it generated over $67 billion in revenue, of which 96% came from defense-related sales.

It is the maker of the famed F-35 fifth-generation fighter jet. For the last several decades, the company has also been delivering advanced autonomous solutions to the U.S. military to meet the needs of its most demanding missions.

Geopolitical tensions in different parts of the world have positioned LMT for continued growth as it is the partner of choice for most American allies. Donald Trump’s victory in the 2024 presidential elections has also raised hopes of increased defense spending, as military expenditure reached record highs during his first stint as president.

According to a recent report in the Financial Times, Taiwan is considering a request to purchase 60 F-35 fighter jets from Lockheed Martin Corporation (NYSE:LMT) to signal the incoming U.S. administration its seriousness about protecting itself from China. People familiar with the matter also told the newspaper that Taipei’s big package of US weapons could also include the Aegis destroyer.

LMT’s financial performance remains impressive. During its recent Q3 2024 earnings call on October 22, the company reported net sales of $17.1 billion, up 1.2% year-over-year, driven by robust performances from the Missiles and Fire Control, and Rotary and Mission Systems segments. Net earnings totaled $1.6 billion, translating to an EPS of $6.80 per share, which beat expectations of $6.54, and was seven cents higher than in the same period last year.

Lockheed Martin Corporation (NYSE:LMT) is also a strong dividend payer. Considering its future cash generation prospects, the Board recently decided to raise the quarterly dividend by 5% to $3.30 per share. This is the 22nd successive year of dividend growth. Investor sentiment around the stock continues to improve. According to Insider Monkey’s database for Q3 2024, 58 hedge funds had investments in the company, up from 56 at the end of the second quarter.

Wall Street analysts are also bullish on the stock, with a consensus Buy rating and forecasting a 21% upside potential in its share price. Considering its low forward P/E ratio, LMT is one of the top undervalued aerospace stocks to buy according to hedge funds.