RTX Provides An Attractive Opportunity Amidst Defense Turmoil

(10min)

Summary

  • RTX's stock decline is driven by defense budget cut fears, but commercial aerospace growth and a $218 billion backlog offer stability and growth prospects.
  • Commercial aerospace sales grew 11.8% last year, outpacing defense sales, indicating that RTX's revenue growth is less dependent on U.S. defense budgets.
  • RTX's backlog, covering 2.5 years of sales, and potential cost efficiencies in procurement processes, mitigate risks from potential defense budget cuts.
  • Maintaining a buy rating for RTX due to its balanced exposure to commercial aerospace and defense, with significant growth potential and cost-saving opportunities.
  • Looking for more investing ideas like this one? Get them exclusively at The Aerospace Forum. Learn More »
US Air Force Lockheed Martin F-35 Lightning II stealth multirole combat aircraft.

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I covered RTX (NYSE:RTX) in January with a buy rating. Since then, the stock has declined more than 4% and is now trading 6.5% off its highest stock price over the past 52 weeks. The reason for that is that aerospace and defense stocks

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This article was written by

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Dhierin-Perkash Bechai is an aerospace, defense and airline analyst.

Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of RTX 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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