In this article, we discuss 5 best aerospace stocks to buy. If you want to see more stocks in this selection, check out 11 Best Aerospace Stocks To Buy.
5. Northrop Grumman Corporation (NYSE:NOC)
Number of Hedge Fund Holders: 46
Northrop Grumman Corporation (NYSE:NOC) is an aerospace and defense company that operates worldwide through Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems segments. On December 7, Northrop Grumman Corporation (NYSE:NOC) announced that it is competing with former partner Blue Origin to win NASA’s estimated $10 billion contract for its next moon lander. The aerospace company is collaborating with Leidos Holdings, Inc. (NYSE:LDOS) to manufacture a spacecraft that will bring astronauts to the lunar surface as part of the Artemis missions. Northrop Grumman Corporation (NYSE:NOC) is one of the premier aerospace stocks to invest in.
On December 15, Morgan Stanley analyst Kristine Liwag raised the firm’s price target on Northrop Grumman Corporation (NYSE:NOC) to $626 from $585 and maintained an Overweight rating on the shares as well as her Top Stock Pick designation.
According to Insider Monkey’s third quarter database, 46 hedge funds were bullish on Northrop Grumman Corporation (NYSE:NOC), compared to 45 funds in the prior quarter. Donald Yacktman’s Yacktman Asset Management is the largest stakeholder of the company, with 433,932 shares worth $204 million.
LRT Capital made the following comment about Northrop Grumman Corporation (NYSE:NOC) in its October investor letter:
“Based in Virginia, Northrop Grumman Corporation (NYSE:NOC) is one of the world’s largest defense contractors with annual revenue of more than $30 billion. The company operates in a cozy oligopoly, that after decades of consolidation the US defense market is now controlled by five large companies: The Boeing Company (BA), General Dynamics Corporation (GD), Lockheed Martin Corporation (LMT), Northrop Grumman Corporation (NOC), and Raytheon Technologies Corporation (RTX).
Industry barriers to entry are immense, government procurement cycles are extremely long, and the consolidated industry structure reflects this. This industry structure has allowed Northrop to earn stable mid-teens returns on invested capital (ROIC) and grow earnings per share at a rate of over 13% per year in the past decade, despite a topline that has grown only in-line with inflation. Even after the recent run-up in the stock price, it trades at approximately 15x, next year’s earnings estimates, far below the S&P 500 index, despite being an above average company. While nominally, there are five major defense contractors, the true industry concentration is even higher because not all companies compete in all possible business segments. General Dynamics’ division submarine division, Electric Boat, is the sole supplier of nuclear power submarines in the United States. Lockheed Martin is the sole supplier of the F-35 and F-22. Northrop was the sole bidder on the contract to develop the next generation of intercontinental ballistic missiles; and so on…” (Click here to read the full text)
