5 Best Defense Stocks To Buy Now

In this article, we will discuss the 5 best defense stocks to buy now. If you want to explore similar stocks on this list, you can also take a look at the 13 Best Defense Stocks To Buy Now.

5. Lockheed Martin Corporation (NYSE:LMT)

Number of Hedge Fund Holders: 52

Lockheed Martin Corporation (NYSE:LMT), created through the merger of Lockheed Corporation and Martin Marietta in March 1995, is a global American corporation engaged in aerospace, arms, defense, information security, and technology. Its headquarters are located in North Bethesda, Maryland, in the Washington, D.C. region. The company is structured into four segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space. The stock surged 9% following increased conflicts between Israel and Hamas earlier this October.

Lockheed Martin Corporation (NYSE:LMW) has been awarded a $379 million contract to manufacture eight Sikorsky MH-60R SEAHAWK helicopters in Owego. These helicopters are intended for the Spanish Navy (the Armada), which had previously procured 12 SH-60B aircraft between 1988 and 2001 and recently acquired eight retired SH-60F Seahawk helicopters from the U.S. Navy. The addition of these new helicopters, set to be delivered to Spain by 2027, will expand the operational MH-60R aircraft fleet globally, which includes the U.S. Navy, Australia, Denmark, Saudi Arabia, and India. Deliveries to Greece and South Korea are scheduled to commence in 2024.

According to Insider Monkey’s second quarter database, 52 hedge funds were long Lockheed Martin Corporation (NYSE:LMT), compared to 58 funds in the earlier quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the largest stakeholder of the company, with 791,700 shares worth $364.4 million.

4. HEICO Corporation (NYSE:HEI)

Number of Hedge Fund Holders: 53

HEICO Corporation (NYSE:HEI), an aerospace and electronics firm, produces a range of products utilized in aircraft, spacecraft, defense equipment, medical devices, and telecommunications systems. In May of this year, HEICO Corporation (NYSE:HEI) announced its intention to acquire Wencor Group in a deal worth $2.05 billion, aimed at expanding its collection of generic parts. This strategic move aligns with the current trend in North America where airlines and aircraft repair facilities are increasingly turning to used and generic parts to maintain aircraft operations due to supply-chain disruptions affecting the availability of branded parts from companies.

At the end of Q2 2023, HEICO Corporation (NYSE:HEI) was held by 53 hedge funds. These funds disclosed positions worth $1.05 billion in the company, up from $1 billion in the previous quarter when 49 hedge funds held stakes in the company. The hedge fund sentiment for the stock is positive. As of the June quarter, Ken Griffin’s Citadel Investment Group is the largest investor in HEICO Corporation (NYSE:HEI) and holds a stake worth $102.2 million.

3. RTX Corporation (NYSE:RTX)

Number of Hedge Fund Holders: 56

RTX Corporation (NYSE:RTX), a company specializing in aerospace and defense, provides systems and services to clientele in the global commercial, military, and government sectors. The organization is structured into four key segments: Collins Aerospace, Pratt & Whitney, Raytheon Intelligence & Space, and Raytheon Missiles & Defense.

On July 25, RTX Corporation (NYSE:RTX) announced a Q2 non-GAAP EPS of $1.29 and revenue of $18.32 billion, surpassing Wall Street projections by $0.11 and $620 million, respectively.

According to Insider Monkey’s second quarter database, 56 hedge funds were bullish on RTX Corporation (NYSE:RTX), compared to 48 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company, with 2.8 million shares worth $276 million.

Carillon Tower made the following comment about Raytheon Technologies Corporation (NYSE:RTX) in its Q3 2022 investor letter:

“Raytheon Technologies Corporation (NYSE:RTX) announced strong results led by strength in its commercial segment, but weakness in its defense business led to investor consternation. Management guided to a recovery in this segment, citing both transitory supply chain issues and continued strong demand.”

2. The Boeing Company (NYSE:BA)

Number of Hedge Fund Holders: 57

The Boeing Company (NYSE:BA) is a multinational American corporation that engages in the design, production, and sale of airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles on a global scale. Additionally, the company offers leasing and product support services.

On August 28, TD Cowen analyst Cai von Rumohr increased his price target on The Boeing Company (NYSE:BA) to $260 from $255 while maintaining an ‘Outperform’ rating on the company’s stock.

Insider Monkey’s database of 910 hedge funds shows that 57 hedge funds had stakes in The Boeing Company (NYSE:BA). The biggest stakeholder of The Boeing Company (NYSE:BA) was Adage Capital Management, which had a $438.60 million stake in the company.

1. TransDigm Group Incorporated (NYSE:TDG)

Number of Hedge Fund Holders: 67

TransDigm Group Incorporated (NYSE:TDG), headquartered in Cleveland, Ohio, is a publicly traded aerospace manufacturing company specializing in the development and production of engineered aerospace components. Established in 1993 through the consolidation of four industrial aerospace firms in a leveraged buyout, the company operates through three main segments: Power & Control, Airframe, and Non-aviation. Serving diverse clientele, TransDigm Group Incorporated (NYSE:TDG) provides solutions to engine and power system component suppliers, airlines, third-party maintenance providers, military procurement agencies, and repair facilities.

On August 8, TransDigm Group Incorporated (NYSE:TDG) released its financial results for the quarter ending on July 1, 2023. The company posted a non-GAAP EPS of $7.25 and a revenue of $1.74 billion, surpassing Wall Street estimates by $0.85 and $55.16 million, respectively.

According to Insider Monkey’s second quarter database, 67 hedge funds were bullish on TransDigm Group Incorporated (NYSE:TDG), same as the prior quarter. Mark Massey’s AltaRock Partners is the leading stakeholder of the company, with 1.35 million shares worth $1.2 billion.

Baron Small Cap Fund made the following comment about TransDigm Group Incorporated (NYSE:TDG) in its second quarter 2023 investor letter:

“We have had some extraordinary winners over time. For instance, we bought DexCom, Inc. at a $950 million market cap in 2012, and it is now valued at $50 billion (the stock has appreciated 41% annually since the Fund’s initial purchase). TransDigm Group Incorporated (NYSE:TDG) has grown from $1.1 billion at purchase to $49 billion presently (and the stock has appreciated 29% annually since the Fund’s initial purchase 17 years ago). IDEXX Laboratories, Inc. has gone from $2 billion at purchase to $42 billion over almost 15 years and the stock has appreciated 26% annually during that time frame. The Trade Desk is now valued at $38 billion and was $433 million when we first purchased shares over 6 years ago. The stock has appreciated almost 60% annually since our initial purchase. Pretty amazing. All four stocks have been solid performers this year, contributing nicely to the Fund’s returns.

Since we run a small-cap fund but want to hold on to these great investments as they continue to compound and perform, we reduce the positions sizes over the holding period so that the overall market capitalization of the Fund is palatable. For each of the four stocks mentioned above, we presently own 11% or less of our peak positions. We take the proceeds from the trimming of these positions to fund new small-cap investments, with the hopes of somehow replicating these results.”

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