11 Undervalued Aerospace Stocks To Buy According to Hedge Funds

1. RTX Corporation (NYSE:RTX)

Forward Price to Earnings Ratio: 20.33

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. The company operates through three main businesses: Collins Aerospace, Pratt & Whitney, and Raytheon.

It has been awarded several critical, high-value contracts in the last few months, raising investor confidence. These include a $736 million contract it received in October from the U.S. Navy to produce AIM-9X SIDEWINDER missiles. More recently, on December 5, the company announced a $590 million production contract from the Navy for the Next Generation Jammer Mid-Band (NGJ-MB) system.

RTX is also an important player in the global drone market. In October, it showcased its anti-drone capabilities to the U.S. Army in Arizona, where its Coyote Block 2 and Block 3 effectors and Ku-band Radio Frequency Sensor (KuRFS) successfully passed stress tests as part of the Army’s counter-drone solution.

On October 22, RTX Corporation (NYSE:RTX) reported financial results for Q3 2024. It generated a revenue of $20.1 billion, growing 6% from last year. The surge was driven by an 11% growth in commercial aftermarket sales, on top of the 25% rise last year driven by the growth in global air travel. Defense-related sales were up 10% during the quarter. Adjusted EPS was logged at $1.45, rising 16% from last year, and beating expectations of $1.34 per share.

RTX Corporation (NYSE:RTX) ended Q3 with a backlog of $221 billion, comprising $90 billion of defense and $131 billion worth of commercial orders. Wall Street analysts have a consensus Buy rating for the stock, with a share price upside potential of over 11%.

Hedge fund sentiment about the company has improved substantially. According to Insider Monkey’s database for Q3 2024, 72 hedge funds had investments in the company, up from 54 at the end of the second quarter.

Overall, RTX ranks first among the 11 Undervalued Aerospace Stocks To Buy According to Hedge Funds. While we acknowledge the potential of aerospace 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.

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