In this article, we discuss the 13 best aerospace stocks to buy on sale. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Aerospace Stocks To Buy On Sale.
Travel demand around the world has started surprising pre-pandemic levels, leading to an increase in demand for aircrafts that has benefited aerospace stocks. Geopolitical upheavals in Europe and the Middle East have also served to boost the aerospace industry as countries look to bolster their defense arsenals. These trends, observed over the past few months, are likely to continue into 2024, providing a tailwind for aerospace stocks like The Boeing Company (NYSE:BA), RTX Corporation (NYSE:RTX), and Lockheed Martin Corporation (NYSE:LMT) that are presently trading at discounted prices.
According to a report by research firm Deloitte, aerospace companies will face challenges such as supply chain issues, longer lead times, and a talent shortage as the demand outlook for the industry improves. Digital transformation as a whole, and the integration of artificial intelligence into products in particular for enhanced productivity, real-time data synchronization, and simplified customization processes will also be a key trend shaping the industry moving forward. Consulting firm PwC estimates that the aerospace and defense sector generated revenues of more than $741 billion in 2022, up from $714 billion in 2021.
Even though this represents a 3% increase in revenue year-on-year, a closer look at the number reveals that the operating margins for the industry increased by 8% during this time. Despite higher demand, the revenues for the top six defense contractors in 2022 were down by 3%, largely due to the supply chain issues and labor constraints. Investors should also closely monitor the development of sustainable propulsion technologies in the aerospace sector as the industry focuses on reducing carbon emissions. Leading defense contractors in the United States are likely to be at the forefront of this endeavor.
Dave Calhoun, the CEO of The Boeing Company (NYSE:BA), recently said during the third quarter earnings call that his company is focused on improving operating margins in the aerospace and defense sector. He added that engineering changes were a key part of this process which would support better installations. The CEO also noted that the firm would hold important supplier negotiations over the course of the next few months. However, he stressed that none of these changes would impact the overall performance of the company and the capability to deliver end products.
“In defense and space, we still have more work to improve operating performance. Results this quarter were impacted by higher estimated costs on the VC-25B program. We are maturing through this build process, incorporating engineering changes to better support the installation process, and we resolved important supplier negotiations over the course of the quarter. I’ll note that none of these items will impact the performance and capability of the end product.
The increased estimates reflect the process by which we build the airplanes. And in a fixed-priced environment, any unplanned hurdles can introduce unrecoverable costs. At the end of the day, we have two airplanes to build. We’re getting past these hurdles and are committed to delivering two exceptional airplanes for our customers.
Separately, as you saw, we are also expecting higher costs on a satellite program as we build out the constellation and meet our light cycle commitments for our customer. We’re working on real innovation and advanced capabilities in this space and see real potential market as we deliver against this commitment. More broadly, across BDS, we’re stabilizing operations and taking comprehensive actions to improve performance, including lean initiatives, contracting disciplines, factory improvements, engineering investments, and more. We’re seeing some early signs of progress, but financial improvement at BDS’ lower volumes takes time.”
Our Methodology
Aerospace stocks that have registered a decrease of 4% or more in share price over the past month were selected and ranked according to hedge fund sentiment. It is important to clarify that since the average PE Ratio for the aerospace industry is high, share price decline was used as a classifier instead. The stocks mentioned below are trading at discounted prices but have long-term growth potential. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2023 was used to identify the number of hedge funds that hold stakes in each company. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
A satellite in orbit, capturing the technological prowess of the aerospace & defense company.
Best Aerospace Stocks To Buy On Sale
13. Spire Global, Inc. (NYSE:SPIR)
Number of Hedge Fund Holders: 5
Decline in Share Price Over Past Month as of January 23: 4.1%
Spire Global, Inc. (NYSE:SPIR) operates from Virgina and markets space-to-cloud data and analytics. It focuses on the tracking of global datasets accumulated from a nanosatellite constellation. On November 9, investment advisory Stifel maintained a Buy rating on Spire Global, Inc. (NYSE:SPIR) stock and lowered the price target to $24 from $26.
At the end of the third quarter of 2023, 5 hedge funds in the database of Insider Monkey held stakes worth $1.2 million in Spire Global, Inc. (NYSE:SPIR), compared to 11 the preceding quarter worth $3.5 million.
Just like Boeing Company (NYSE:BA), RTX Corporation (NYSE:RTX), and Lockheed Martin Corporation (NYSE:LMT), Spire Global, Inc. (NYSE:SPIR) is one of the best aerospace stocks to buy on sale.
12. EHang Holdings Limited (NASDAQ:EH)
Number of Hedge Fund Holders: 6
Decline in Share Price Over Past Month as of January 23: 31.4%
EHang Holdings Limited (NASDAQ:EH) operates as an autonomous aerial vehicle (AAV) technology platform company. In late November, EHang Holdings Limited (NASDAQ:EH) posted earnings for the third quarter of 2023, reporting a revenue of $3.9 million, up more than 247% compared to the revenue over the same period in the preceding year.
At the end of the third quarter of 2023, 6 hedge funds in the database of Insider Monkey held stakes worth $2.5 million in EHang Holdings Limited (NASDAQ:EH), up from 4 the preceding quarter worth $1.8 million.
In its Q3 2023 investor letter, Deep Sail Capital, an asset management firm, highlighted a few stocks and EHang Holdings Limited (NASDAQ:EH) was one of them. Here is what the fund said:
“Our worst-performing short position was EHang Holdings Limited (NASDAQ:EH), which saw significant upside from EVtol excitement and exhibited squeeze dynamics in the quarter. We seek to avoid these types of squeezes and are attempting to be nimbler in our short positioning at these levels.”
11. Virgin Galactic Holdings, Inc. (NYSE:SPCE)
Number of Hedge Fund Holders: 8
Decline in Share Price Over Past Month as of January 23: 22.6%
Virgin Galactic Holdings, Inc. (NYSE:SPCE) focuses on the development, manufacture, and operation of spaceships and related technologies for conducting commercial human spaceflight and flying commercial research and development payloads into space. At the end of the third quarter of 2023, 8 hedge funds in the database of Insider Monkey held stakes worth $6.3 million in Virgin Galactic Holdings, Inc. (NYSE:SPCE), compared to 14 in the preceding quarter worth $11 million.
10. AST SpaceMobile, Inc. (NASDAQ:ASTS)
Number of Hedge Fund Holders: 9
Decline in Share Price Over Past Month as of January 23: 49%
AST SpaceMobile, Inc. (NASDAQ:ASTS) markets space-based cellular broadband services and is headquartered in Texas. On November 21, investment advisory Deutsche Bank maintained a Buy rating on AST SpaceMobile, Inc. (NASDAQ:ASTS) stock and lowered the price target to $23 from $32.
At the end of the third quarter of 2023, 9 hedge funds in the database of Insider Monkey held stakes worth $9 million in AST SpaceMobile, Inc. (NASDAQ:ASTS), compared to 14 the preceding quarter worth $32 million.
9. Rocket Lab USA, Inc. (NASDAQ:RKLB)
Number of Hedge Fund Holders: 11
Decline in Share Price Over Past Month as of January 23: 10.7%
Rocket Lab USA, Inc. (NASDAQ:RKLB) is a space company that provides launch services and space systems solutions for the space and defense industries. On December 23, investment advisory Roth MKM maintained a Buy rating on Rocket Lab USA, Inc. (NASDAQ:RKLB) stock with a price target of $7.
At the end of the third quarter of 2023, 11 hedge funds in the database of Insider Monkey held stakes worth $41 million in Rocket Lab USA, Inc. (NASDAQ:RKLB), compared to 10 the preceding quarter worth $110 million.
8. CAE Inc. (NYSE:CAE)
Number of Hedge Fund Holders: 11
Decline in Share Price Over Past Month as of January 23: 6.6%
CAE Inc. (NYSE:CAE) provides simulation training and critical operations support solutions. In mid-November, CAE Inc. (NYSE:CAE) posted earnings for the second fiscal quarter, reporting a revenue of more than C$1 billion, up close to 10% year-on-year.
At the end of the third quarter of 2023, 11 hedge funds in the database of Insider Monkey held stakes worth $112 million in CAE Inc. (NYSE:CAE), compared to 13 the preceding quarter worth $134 million.
In its Q4 2023 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and CAE Inc. (NYSE:CAE) was one of them. Here is what the fund said:
“Our largest sales were Tencent and CAE Inc. (NYSE:CAE). We took profits in Canadian aerospace and defense training provider CAE to fund better opportunities, as the post-COVID recovery in civil pilot training has already progressed well and earnings have recovered.”
7. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)
Number of Hedge Fund Holders: 11
Decline in Share Price Over Past Month as of January 23: 9.6%
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is a California-based company that makes and sells space-related products and services. On November 3, investment advisory Baird maintained an Outperform rating on Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) stock and raised the price target to $22 from $17.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm ARK Investment Management is a leading shareholder in Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) with 6.2 million shares worth more than $94 million.
6. Embraer S.A. (NYSE:ERJ)
Number of Hedge Fund Holders: 14
Decline in Share Price Over Past Month as of January 23: 6.4%
Embraer S.A. (NYSE:ERJ) designs, develops, manufactures, and sells aircraft and systems. In early December, Embraer S.A. (NYSE:ERJ) announced that it had won a contract to supply the military of South Korea with cargo planes.
At the end of the third quarter of 2023, 14 hedge funds in the database of Insider Monkey held stakes worth $94 million in Embraer S.A. (NYSE:ERJ), the same as in the preceding quarter worth $114 million.
Along with Boeing Company (NYSE:BA), RTX Corporation (NYSE:RTX), and Lockheed Martin Corporation (NYSE:LMT), Embraer S.A. (NYSE:ERJ) is one of the best aerospace stocks to buy on sale.
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Disclosure. None. 13 Best Aerospace Stocks To Buy On Sale is originally published on Insider Monkey.