In this article, we discuss the 5 best space stocks to buy according to hedge funds. If you want to read our detailed analysis of these stocks, go directly to the 11 Best Space Stocks To Buy According To Hedge Funds.
5. Northrop Grumman Corporation (NYSE:NOC)
Number of Hedge Fund Holders: 42
Northrop Grumman Corporation (NYSE:NOC) is placed fifth on our list of 11 best space stocks to buy according to hedge funds. The firm operates in the aerospace and defense industry. It is headquartered in Virginia.
On September 23, investment advisory Goldman Sachs upgraded Northrop Grumman Corporation (NYSE:NOC) stock to Neutral from Sell with a price target of $350, noting the firm was best positioned for growth in light of increased opportunities in the space realm.
At the end of the second quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Northrop Grumman Corporation (NYSE:NOC), up from 40 in the preceding quarter worth $1.5 billion.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Northrop Grumman Corporation (NYSE:NOC) was one of them. Here is what the fund said:
“New purchases include Northrop Grumman. Northrop Grumman is a leader in manned aircraft, unmanned aircraft, spacecraft and missile-defense systems. We initiated a position in November 2020, as we believe the name is trading at an undeserved discount, despite having the potential to accelerate revenue over the next 24 months. In 2020, Northrup signed a contract to work with the US Air Force on their Ground Based Strategic Deterrent (GBSD) and B21 bomber. We believe the company’s portfolio is well-positioned with a highly desirable space segment business, significant classified content and GBSD driving growth. While the market has been focused on a “blue wave” risk to the defense budget, the industry is typically driven by threat assessment rather than budget constraints. If budget cuts were ever to affect the US Army, that customer represents less than 10% of the company’s revenue. This reinforces our belief that Northrop is well-positioned for the future and trades at an attractive valuation.”
4. Howmet Aerospace Inc. (NYSE:HWM)
Number of Hedge Fund Holders: 47
Howmet Aerospace Inc. (NYSE:HWM) is a Pennsylvania-based firm that markets engineering solutions for the aerospace industry. It is ranked fourth on our list of 11 best space stocks to buy according to hedge funds.
On September 27, investment advisory UBS initiated coverage of Howmet Aerospace Inc. (NYSE:HWM) stock with a Buy rating and a price target of $40, noting the firm was attractively positioned to benefit from a recovery in the aerospace sector.
At the end of the second quarter of 2021, 47 hedge funds in the database of Insider Monkey held stakes worth $3.8 billion in Howmet Aerospace Inc. (NYSE:HWM), down from 51 in the preceding quarter worth $3.9 billion.
In its Q4 2020 investor letter, FPA Crescent Fund, an asset management firm, highlighted a few stocks and Howmet Aerospace Inc. (NYSE:HWM) was one of them. Here is what the fund said:
“Howmet saw its stock price decline by around two-thirds from their Q1 2020 highs. Howmet’s price increased about three times from its low and ended the year at its all-time high. The value of its necessary and large market share business did not fluctuate as much as its stock price.”
3. Raytheon Technologies Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 53
Raytheon Technologies Corporation (NYSE:RTX) is a Massachusetts-based aerospace and defense company. It is placed third on our list of 11 best space stocks to buy according to hedge funds.
On August 11, investment advisory Morgan Stanley reiterated an Overweight rating on Raytheon Technologies Corporation (NYSE:RTX) stock and raised the price target to $110 from $97, predicting that the margins of the firm would expand earlier than expected.
At the end of the second quarter of 2021, 53 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in Raytheon Technologies Corporation (NYSE:RTX), down from 58 in the preceding quarter worth $2.4 billion.
In its Q4 2020 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Raytheon Technologies Corporation (NYSE:RTX) was one of them. Here is what the fund said:
“In today’s uncertain economy, we believe we have found such businesses trading at bargain prices in two sectors: industrials and financials. In the industrial space, concerns about the impact of the economic downturn on short-term profitability led to a wave of selling in a select group of leaders with durable competitive advantages, long records of profitability and bright long-term prospects. Companies like Raytheon Technologies is a wonderful example of attractive investments in this sector.”
2. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 58
Lockheed Martin Corporation (NYSE:LMT) is ranked second on our list of 11 best space stocks to buy according to hedge funds. The company operates as a security and aerospace firm. It is headquartered in Maryland.
On September 27, investment advisory Morgan Stanley maintained an Overweight rating on Lockheed Martin Corporation (NYSE:LMT) stock with a price target of $458, underlining that investor interest in the firm was the highest level in a decade.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm Arrowstreet Capital is a leading shareholder in Lockheed Martin Corporation (NYSE:LMT) with 536,001 shares worth more than $202 million.
In its Q4 2020 investor letter, RiverPark Advisors, LLC, an asset management firm, highlighted a few stocks and Lockheed Martin Corporation (NYSE:LMT) was one of them. Here is what the fund said:
“Despite better-than-expected third quarter results, LMT shares were weak for the quarter as defense spending is expected to be flat for the coming year. With a record $150 billion backlog and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year in 4-5 years (3Q’s revenue upside was from the F-35), we believe LMT should grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions (LMT acquired AJRD for $4 billion in late December), debt pay down, a 3% dividend yield, and continued share buybacks from $6 billion per year of free cash flow should lead to even greater shareholder returns.”
1. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 59
The Boeing Company (NYSE:BA) is placed first on our list of 11 best space stocks to buy according to hedge funds. The company makes and sells aerospace products. It operates from Illinois.
On September 29, investment advisory Bernstein upgraded The Boeing Company (NYSE:BA) stock to Outperform from Market Perform and raised the price target to $279 from $252, noting that the global travel industry was rebounding and would benefit the aerospace firm.
At the end of the second quarter of 2021, 59 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in The Boeing Company (NYSE:BA), the same as in the preceding quarter worth $1.4 billion.
In its Q1 2020 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and The Boeing Company (NYSE:BA) was one of them. Here is what the fund said:
“We’ve known Boeing for a long time. It’s always been a high quality company that’s traded for a premium valuation owing to its position as a global duopoly. We’d looked at it recently after weakness due to its highly publicized Max 737 issues, but it never got cheap enough for us to pull the trigger. After the pandemic, the stock went into freefall as its customer bases’ business dried up and people worried about its liquidity. The stock fell from $338 on February 19th when the S&P hit its high to a low of $89. We bought the stock after the new CEO Dave Calhoun said publicly that it would not take government capital if it required equity dilution because it had many other options. Our average price is just above $120 where it was trading for less than 7x what it earned in 2018. It will likely take a while to normalize to those earnings levels, but this business will survive and ultimately we will own a leader in a global duopoly. Even on depressed forecasts, the company currently has about a 10-15% free cash flow yield. If and when the economy normalizes, we think Boeing could be worth more than double its current price.”
You can also take a peek at 10 Best Stocks to Buy According to Billionaire Ken Fisher and 10 Best Stocks to Buy for the Next Ten Years.
