In this piece, we will take a look at the five best defense stocks to buy that are too cheap to ignore. For an industry background and more cheap stocks, head on over to 10 Best Defense Stocks to Buy That Are Too Cheap to Ignore.
5. Embraer S.A. (NASDAQ:ERJ)
Share Price as of October 13, 2022: $8.85
Number of Hedge Fund Holders: 11
Embraer S.A. (NASDAQ:ERJ) is a Brazilian company that manufactures and sells aircraft systems in North America, Brazil, Europe, and globally. The firm’s products include radars and communications systems and it is headquartered in Sao Paulo, Brazil.
Embraer S.A. (NASDAQ:ERJ) is the world’s largest jet manufacturer, after having delivered 150 seats over the past decade. It is also one of the most prominent aviation firms in the world, as it has partnered up with big ticket names such as Thales Alenia and BAE Systems. To top things up, Embraer S.A. (NASDAQ:ERJ) also has a fortress balance sheet with no debt and $176 million in cash as of Q2 2022.
Insider Monkey’s Q2 2022 survey of 895 hedge funds saw 11 investors hold Embraer S.A. (NASDAQ:ERJ)’s shares. Wolfe Research set a $14 share price target for the company in October 2022, as it stated that costs and airline orders present a huge opportunity.
Embraer S.A. (NASDAQ:ERJ)’s largest investor is Paul Marshall and Ian Wace’s Marshall Wace LLP which owns 3.5 million shares that are worth $31 million.
4. Moog Inc. (NYSE:MOG-A)
Share Price as of October 13, 2022: $76.32
Number of Hedge Fund Holders: 11
Moog Inc. (NYSE:MOG-A) is an American company that provides flight controls for aircraft, spacecraft, launch vehicles, combat vehicles, and space vehicles. It is headquartered in East Aurora, New York.
Moog Inc. (NYSE:MOG-A)’s third fiscal quarter saw its revenue grow by 9% to sit at $773 million. During the same time period, its adjusted earnings per share (EPS) grew by 44% annually to sit at $1.61. The company also increased its full year EPS guidance by 15 cents to $5.65. Finally, by the end of this year, the firm expects its revenues to grow by 6% and cross $3 billion.
Revenue for Moog Inc. (NYSE:MOG-A)’s Space and Defense segment stood at $224 million in the year, as it enjoyed a 9% growth. As this year’s June quarter ended, 11 out of the 895 hedge funds polled by Insider Monkey had invested in Moog Inc. (NYSE:MOG-A).
Moog Inc. (NYSE:MOG-A)’s largest investor is D.E. Shaw’s D E Shaw which owns 351,428 shares that are worth $27 million.
3. AAR Corp. (NYSE:AIR)
Share Price as of October 13, 2022: $39.39
Number of Hedge Fund Holders: 19
AAR Corp. (NYSE:AIR) is an American aviation company that is headquartered in Wood Dale, Illinois. The firm provides the defense sector with products such as engine and air frame parts, alongside providing inventory management services.
AAR Corp. (NYSE:AIR) was hit hard by the coronavirus pandemic as the global aviation industry saw its demand sapped. However, the firm has started to recover now, and its fiscal year 2022 saw revenues grow by 10.3%, with sales to its commercial customers growing by 34%.
AAR Corp. (NYSE:AIR) also signed an important contract with the Norwegian defense forces earlier this year to manage supply parts and forecast demand. Additionally, another big contract came from the U.S. Air Force which saw AAR Corp. (NYSE:AIR) win a $173 million contract for new cargo aluminum pallets. By the end of this year’s second quarter, 19 out of the 895 hedge funds polled by Insider Monkey had bought the company’s shares.
AAR Corp. (NYSE:AIR)’s largest investor in our hedge fund database is David Rosen’s Rubric Capital Management which owns 1.1 million shares that are worth $46 million.
2. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)
Share Price as of October 13, 2022: $9.66
Number of Hedge Fund Holders: 20
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is a government contractor that serves the needs of the Pentagon. The firm provides products and services such as satellite communications, turbine technologies, and rocket support services. It is headquartered in San Diego, California.
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)’s latest earnings report saw the firm grow its revenue by $224 million and beat the earnings per share (EPS) guidance. Additionally, the firm’s management sees a huge opportunity pipeline of $9 billion. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) also manufactures some of the most advanced military drones in the world, with its XQ-58A Valkyrie drone currently under development being one of the few fully stealthy drones in the world.
The drone segment is crucial given the Pentagon’s over the horizon strategy that has gained prevalence under the Biden Administration. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) has also been on a contract winning spree this year, with the firm winning a $174 million contract from the U.S. Navy in September 2022.
By the end of this year’s second quarter, 20 out of the 895 hedge funds polled by Insider Monkey had held a stake in the company.
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)’s largest investor is Catherine D. Wood’s ARK Investment Management which owns 8.2 million shares that are worth $118 million.
1. Ducommun Incorporated (NYSE:DCO)
Share Price as of October 13, 2022: $41.96
Number of Hedge Fund Holders: 23
Ducommun Incorporated (NYSE:DCO) is an aerospace and defense engineering and manufacturing services provider. The firm makes and sells products such as circuit boards, and avionics racks. radar enclosures, and surge protectors. The company is headquartered in Santa Ana, California, the United States.
Ducommun Incorporated (NYSE:DCO) has some of the strongest current and future growth estimates in the defense industry. The firm is estimated to grow its revenues during its current fiscal year by 21%, and at an average of 15.8% for the next five years. Ducommun Incorporated (NYSE:DCO) also has the highest upside share price reward and the lowest downside risk among its peers.
Ducommun Incorporated (NYSE:DCO) grew its revenue by 9% during its second fiscal quarter, and its backlog grew by 50% to stand at $419 million at quarter end. Insider Monkey’s Q2 2022 survey of 895 hedge funds saw 23 investors in the firm.
Out of these, Chuck Royce’s Royce & Associates is Ducommun Incorporated (NYSE:DCO)’s largest investor. It owns 399,402 shares that are worth $17 million.
Disclosure: None. You can also take a look at 13 Best Cybersecurity Stocks To Buy and 10 Best Stocks to Buy Now According to Billionaire Andreas Halvorsen.
