We recently published a list of 12 Best Aerospace and Defense Stocks to Buy According to Analysts. In this article, we are going to take a look at where Loar Holdings Inc. (NYSE:LOAR) stands against other best aerospace and defense stocks to buy according to analysts.
Defense Spending Uncertainty
On February 13, CNBC reported that President Trump’s statement regarding a potential reduction in US defense spending triggered a drop in defense stocks. During a White House event, the President proposed cutting the defense budget in half, stating that there is no need for the United States to spend nearly $1 trillion on the military. He mentioned plans to discuss this idea with China and Russia in future meetings. This sent mixed signals regarding military spending. On the one hand, he has emphasized the need for a strong military and proposed initiatives like the “Iron Dome of America,” a missile defense system. On the other hand, he also suggested significant cuts to defense spending, aligning with broader efforts to reduce government expenditures.
To discuss this, TD Cowen’s Roman Schweizer joined CNBC for an interview on February 14. He noted that setting aside all the mixed signals and uncertainty around the sector, the government would increase defense spending. This will be a result of the reconciliation plan of the Senate and House, however, the magnitude of this increase is still unclear. Schweizer also noted that some members of both the House and Senate are pushing President Trump to increase defense spending to 4% or 5% of GDP. Moreover, US Secretary of Defense, Pete Hegseth, reiterated that US defense should be pegged at 3% of GDP. Schweizer highlighted that this forms an interesting baseline for a potential $40 billion to $60 billion increase in spending over the upcoming years.
Regardless of the uncertainty in the White House regarding increasing or decreasing defense spending, the industry has been redefining itself with the help of technology and AI. On February 21, Morgan Stanley released a report highlighting megatrends for the industry. The report highlights that innovations in unmanned drones, robotics, autonomy, and artificial intelligence are not only modernizing military operations but also influencing how nations allocate and grow their defense budgets. In 2023, global military expenditures reached a record high of $2.4 trillion, marking a 6.8% increase from the previous year, the steepest annual growth since 2009.
Morgan Stanley’s Global Investment Office views this resurgence in defense spending and technological innovation as an opportunity to enhance productivity and stimulate economic growth. They highlighted that the integration of new technologies can create investment opportunities not only in defense contractors but also in related sectors such as supply chains, transportation, manufacturing, energy, and cybersecurity.
Our Methodology
To curate the list of 12 best aerospace and defense stocks to buy according to analysts we used the Finviz stock screener and CNN as our sources. Using the screener we aggregated a list of aerospace and defense stocks for which analysts see more than 30% upside in the next 12 months. After sorting the list by market capitalization, we cross checked the analyst upside from CNN and ranked the stocks in ascending order of this indicator. We have also added the hedge fund sentiment around each stock sourced from Insider Monkey’s Q4 2024 database. Please note that the data was recorded on March 27, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A machinist performing intricate work on a high-temperature resistant alloy for a jet engine.
Loar Holdings Inc. (NYSE:LOAR)
Number of Hedge Fund Holders: 32
Analyst Upside Potential: 39.66%
Loar Holdings Inc. (NYSE:LOAR) is a diversified manufacturer and supplier of niche aerospace and defense components. It specializes in designing, manufacturing, and selling a wide range of products that support major aircraft platforms. The company serves three core end markets including commercial aerospace, business jet, and general aviation.
Loar Holdings Inc. (NYSE:LOAR) reported a significant increase in net sales for the third quarter of 2024, reaching $103.5 million. This represents a 25% year-over-year growth, driven by robust demand in both commercial and defense sectors. The company’s strong performance is attributed to its strategic execution and the growing demand for aerospace and defense components. For 2025, the company forecasts net sales between $470 million and $480 million.
It is actively expanding its portfolio through strategic acquisitions. A notable example is the planned purchase of LMB Fans & Motors for €365 million, which is expected to enhance the company’s specialized aerospace and defense component offerings. It is one of the best aerospace and defense stocks to buy according to analysts.
TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding Loar Holdings Inc. (NYSE:LOAR) in its Q3 2024 investor letter:
“Many of our Industrials positions provide necessary business-to-business operational services, highly technical components, equipment enabling automation & efficiency improvements, or essential infrastructure services. Providing a 40% lift was Loar Holdings Inc. (NYSE:LOAR), a diversified manufacturer and supplier of niche aerospace and defense components. We first added Loar to the strategy on its IPO in April and continued building the position early this quarter. Later, Loar reported higher-than-anticipated revenues and earnings, then boosted its guidance for the rest of the year. Loar forecasted increased growth for all three of its end-markets: aerospace original equipment, aftermarket, and defense.”
Overall, LOAR ranks 7th on our list of best aerospace and defense stocks to buy according to analysts. While we acknowledge the potential of LOAR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LOAR 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.
