PPA: Well-Diversified Aerospace And Defense ETF Worth Buying

Summary

• PPA is a U.S. Aerospace & Defense ETF with an impressive long-term track record. Its expense ratio is 0.58% and the ETF has $3.60 billion in assets under management.
• Positive defense spending projections should support the continued growth of PPA's holdings. In addition, a Republican Senate, which is the likely outcome for 2025, typically results in larger-than-average spending increases.
• PPA's factor mix is superior to peers like ITA, XAR, MISL, and GCAD. In particular, I like its strong diversification, risk, and quality features, and its 15% estimated earnings growth.
• Valuation is the main risk. PPA trades at 23.42x forward earnings, but even that is more attractive than most of its peers.
• PPA remains a buy.

guvendemir

Investment Thesis

I last covered the Invesco Aerospace & Defense ETF (NYSEARCA:PPA) on May 2, 2024, when I reiterated my buy rating. I based this call on PPA's superior quality and diversification features over competitors like the iShares U.S. Aerospace & Defense

Analyst’s Disclosure: I/we have a beneficial long position in the shares of PPA, SPY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.