We recently published a list of 10 Defense and Aerospace Stocks To Benefit From Trump’s Peace Through Strength Policy. In this article, we are going to take a look at where GE Aerospace (NYSE:GE) stands against other defense and aerospace stocks to benefit from Trump’s peace through strength policy.
Donald Trump is a vocal critic of international conflicts, especially those in which the US gets involved militarily or financially. At his inauguration, he continued the old Republican policy of Peace Through Strength, implying that the US and its allies should increase defense spending not to fight more wars but to ensure fewer wars happen.
In other words, this means defense contractors continue to make money even if global conflicts die down under Donald Trump. EU leaders have just held an informal meeting to discuss transatlantic relations and defense spending. President of the European Commission, Ursula von der Leyen, is considering extraordinary measures to boost defense budgets.
Under these circumstances, it is vital to understand that most defense and aerospace stocks should continue to benefit even during peaceful times. We, therefore, decided to create a list of stocks that are likely to survive any change in policy during the unpredictable Donald Trump’s term.
To come up with our list of 10 Defense and Aerospace stocks that will benefit from Trump’s Peace Through Strength policy, we only considered stocks that have a market cap of at least $5 billion, an ROE of over 15%, and a forward PE under 40 against an industry average PE of 63.
A technician in a power station monitoring the flow of energy generated by a gas turbine.
GE Aerospace (NYSE:GE)
GE Aerospace develops defense and commercial aircraft engines, electric power, integrated engine components, and mechanical aircraft systems. The company also provides aftermarket services. A 21% YTD return has allowed the stock to touch 52-week highs as all the growth engines continue to perform strongly despite minor hiccups.
GE Aerospace released its Q4 earnings last month and a 46.6% order growth together with a 16% organic growth was the best performance by the company since Q2 2023. The company’s growth is being driven by two factors.
First, the investments in the LEAP program are likely to keep bringing benefits. The LEAP program aims to develop fuel-efficient aircraft engines. Airbus and Boeing continue to rely on GE Aerospace’s LEAP engines for some of their aircraft. The LEAP 10A durability kit was certified by the US and EU aviation regulatory authorities in December, so everything seems to be on track.
Second, the company’s Flight Deck program helps it address any supply chain issues as soon as they arise. In Q4, the company improved its output by 19% according to the management, based primarily on improvements through the Flight Deck program.
On top of these two factors, the company continues to expand its aftermarket capabilities, aiming to generate higher revenue from these services in the next five years. This sets up the company well as a growth investment going forward.
Overall, GE ranks 6th on our list of defense and aerospace stocks to benefit from Trump’s peace through strength policy. While we acknowledge the potential of GE as a leading AI investment, our conviction lies in the belief that some 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 as promising as GE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
