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United Technologies and Raytheon announced the signing of a major merger and acquisition agreement this weekend. That's why it's a good time to review the US aerospace and defense sector.
United Technologies
UTX, -3.13%
will acquire Raytheon
RTN, + 0.69%
in a deal any stock. At market close on June 7, the market value of the companies was $ 166 billion. However, the agreement values the company resulting from the merger at $ 100 billion after the expected fallout. This will create the second largest US aerospace and defense company after Boeing
BA, + 0.03%
when the merger will be completed next year.
The following information relates to the closing on June 7th. The UTX / Raytheon merger was announced on June 9th.
The S & P 500 Aerospace and Defense sector was up 23% in 2019 (dividends reinvested), while the entire S & P 500
SPX, + 0.47%
was up 16%.
This chart compares the five-year total returns (reinvested dividends) of the S & P 500 Aerospace & Defense sub-sector with those for the overall index:
FactSet
Here's one that compares the 10-year returns:
FactSet
15-year returns:
FactSet
The long-term history is so very good. Commercial air transportation remains a strong and growing industry, and it is clear that, regardless of which party controls Congress or the White House, the US government will continue to inject large sums into national defense.
Aerospace and Defense ETF
Here are some examples of ETFs that track companies in the aerospace, defense and related industries in a broad and leverage-free way, using different approaches.
SPDR S & P Aerospace and Defense ETF
XAR, -0.07%
follows the equally weighted S & P Aerospace & Defense Select Industry Index with an annual fee of 0.35% and a five-star rating (the highest) of Morningstar. The rating may not be surprising given the outperformance of the subsector. He held 31 shares at the close of June 7.
US ETF iShares Aerospace & Defense
ITA -0.61%
is weighted by market capitalization. The fund's annual expense ratio is 0.43% and is also rated Morningstar by stars. He held 34 shares at the close of June 7.
Invesco ETF Aerospace and Defense
APP -0.34%
is also weighted by market capitalization, with an annual spend of 0.60% and a five-star rating from Morningstar. He held 48 shares on June 7.
All three take reasonable approaches to tracking the industry, but you should take a closer look at their methodologies and portfolios, which are published daily, before considering an investment.
A & D analysts favorite stocks
Opinions on which companies to consider for the aerospace and defense portfolios differ. A combined list of equity holdings of the three ETFs, eliminating duplicates, includes 56 large-cap, mid-cap and small-cap companies. Small business stocks have been volatile this year.
Here are the 10 that got the best results this year, as well as a summary of the analysts' views from the seller side:
| Business | Teleprinter | Market Capitalization (millions of dollars) | Total return – 2019 | Share the & # 39; buy & # 39; ratings & # 39; | Closing price – June 7th | Price consensus objective | Implied growth potential over 12 months |
| Triumph Group Inc. |
TGI + 2.45% |
998 | 74% | 33% | $ 19.99 | $ 27.64 | 38% |
| Vectrus Inc. |
VEC -0.43% |
421 | 71% | 0% | $ 36.83 | $ 45.00 | 22% |
| KEYW Holding Corp. |
KEYW, + 0.00% |
564 | 68% | 0% | $ 11.25 | $ 10.88 | -3% |
| HEICO Corp. |
HE I, + 0.04% |
6,885 | 65% | 73% | $ 127.95 | $ 123.40 | -4% |
| Kratos Defense and Security Solutions Inc. |
KTOS, -3.08% |
2,370 | 59% | 56% | $ 22.38 | $ 21.56 | -4% |
| Axon Enterprise Inc. |
AAXN, + 3.95% |
4,090 | 58% | 69% | $ 69.18 | $ 72.30 | 5% |
| KBR Inc. |
KBR + 0.04% |
3,305 | 55% | 33% | $ 23.36 | $ 25.68 | ten% |
| ViaSat Inc. |
VSAT, + 0.49% |
5,492 | 54% | 44% | $ 90.63 | $ 94.14 | 4% |
| Woodward Inc. |
WWD + 0.03% |
7,056 | 53% | 50% | $ 113.60 | $ 114.63 | 1% |
| OSI Systems Inc. |
OSIS, + 0.47% |
2,031 | 53% | 75% | $ 112.20 | $ 112.75 | 0% |
| Source: FactSet | |||||||
You can click on the tickers to find out more about each company.
Here are the 10 worst results of this year among the 56 actions:
| Business | Teleprinter | Market Capitalization (millions of dollars) | Total return – 2019 | Share the & # 39; buy & # 39; ratings & # 39; | Closing price – June 7th | Consensus Price Target | Implied growth potential over 12 months |
| Maxar Technologies Inc. |
MAXR, + 1.47% |
486 | -50% | 13% | $ 8.15 | $ 10.35 | 27% |
| American Outdoor Brands Corp. |
AOBC, + 2.04% |
455 | -35% | 33% | $ 8.34 | $ 13.80 | 65% |
| Presto National Industries Inc. |
NPK -0.28% |
655 | -16% | N / A | $ 93.68 | N / A | N / A |
| Intelsat SA |
I, -1.63% |
2,586 | -14% | 50% | $ 18.39 | $ 28.00 | 52% |
| AAR Corp. |
AIR, + 2.15% |
1,159 | -11% | 80% | $ 33.06 | $ 47.00 | 42% |
| FireEye Inc. |
feye, + 1.04% |
3,080 | -11% | 48% | $ 14.43 | $ 19.94 | 38% |
| AeroVironment Inc. |
AVAV, -0.92% |
1,532 | -6% | 29% | $ 64.02 | $ 74.60 | 17% |
| Sturm, Ruger & Co. Inc. |
RGR, + 1.69% |
889 | -3% | N / A | $ 50.91 | N / A | N / A |
| Kaman Corp. Class A |
KAMN, + 0.27% |
1,636 | 5% | 0% | $ 58.56 | $ 58.50 | 0% |
| Textron Inc. |
SMS, + 0.94% |
11,431 | 7% | 69% | $ 49.11 | $ 63.08 | 28% |
| Source: FactSet | |||||||
Of the 56 titles, 31 are mostly "bought" or equivalent among analysts. Here they are:
| Business | Teleprinter | Market Capitalization (millions of dollars) | Total return – 2019 | Share the & # 39; buy & # 39; ratings & # 39; | Closing price – June 7th | Consensus Price Target | Implied growth potential over 12 months |
| Cubic Corp. |
LION CUB, + 0.22% |
1,863 | 12% | 100% | $ 59.80 | $ 75.60 | 26% |
| Harris Corp. |
HRS -0.82% |
23,414 | 48% | 92% | $ 198.21 | $ 206.00 | 4% |
| FLIR Systems Inc. |
FLIR + 2.05% |
6,866 | 17% | 89% | $ 50.70 | $ 59.25 | 17% |
| Booz Allen Hamilton Holding Corp. Class A |
BAH, -0.21% |
9,249 | 47% | 83% | $ 66.05 | $ 67.36 | 2% |
| AAR Corp. |
AIR, + 2.15% |
1,159 | -11% | 80% | $ 33.06 | $ 47.00 | 42% |
| Honeywell International Inc. |
HON -0.57% |
125,361 | 32% | 79% | $ 172.26 | $ 180.35 | 5% |
| Mercury Systems Inc. |
MRCY, + 0.76% |
3,793 | 45% | 78% | $ 68.52 | $ 74.63 | 9% |
| Raytheon Co. |
RTN, + 0.69% |
52,031 | 22% | 76% | $ 185.91 | $ 213.88 | 15% |
| Moog Inc. Class A |
MOG.A, + 1.75% |
2,836 | 13% | 75% | $ 87.32 | $ 103.50 | 19% |
| OSI Systems Inc. |
OSIS, + 0.47% |
2,031 | 53% | 75% | $ 112.20 | $ 112.75 | 0% |
| Northrop Grumman Corp. |
NOC -2.19% |
54,046 | 31% | 74% | $ 318.29 | $ 329.71 | 4% |
| HEICO Corp. |
HE I, + 0.04% |
6,885 | 65% | 73% | $ 127.95 | $ 123.40 | -4% |
| Holdings Leidos Inc. |
LDOS, -0.31% |
11,453 | 51% | 70% | $ 79.42 | $ 79.78 | 0% |
| Textron Inc. |
SMS, + 0.94% |
11,431 | 7% | 69% | $ 49.11 | $ 63.08 | 28% |
| Axon Enterprise Inc. |
AAXN, + 3.95% |
4,090 | 58% | 69% | $ 69.18 | $ 72.30 | 5% |
| Aerojet Rocketdyne Holdings Inc. |
AJRD, + 2.38% |
3,104 | 12% | 67% | $ 39.47 | $ 41.00 | 4% |
| Science Applications International Corp. |
SAIC, + 0.56% |
5,092 | 36% | 67% | $ 86.05 | $ 92.22 | 7% |
| Astronics Corp. |
ATRO, -1.08% |
1,048 | 40% | 67% | $ 42.73 | $ 44.67 | 5% |
| CACI International Inc. Class A |
CACI, -0.76% |
5,174 | 44% | 67% | $ 208.05 | $ 218.75 | 5% |
| Boeing Co. |
BA, + 0.03% |
199,002 | 11% | 65% | $ 353.70 | $ 435.09 | 23% |
| L3 Technologies Inc. |
I GO, -0.73% |
20,369 | 49% | 64% | $ 256.37 | $ 253.45 | -1% |
| United Technologies Corp. |
UTX, -3.13% |
113,952 | 26% | 63% | $ 132.15 | $ 151.69 | 15% |
| Lockheed Martin Corp. |
LMT, -1.02% |
100,462 | 38% | 63% | $ 355.23 | $ 371.71 | 5% |
| Comtech Telecommunications Corp. |
CMTL, -2.61% |
657 | 13% | 60% | $ 27.21 | $ 34.60 | 27% |
| Ducommun Inc. |
COD, -1.45% |
522 | 25% | 60% | $ 45.42 | $ 52.40 | 15% |
| TransDigm Group Inc. |
TDG + 1.23% |
24,935 | 38% | 59% | $ 468.88 | $ 517.38 | ten% |
| Curtiss-Wright Corp. |
CW, + 0.25% |
5,050 | 16% | 57% | $ 118.06 | $ 136.80 | 16% |
| Ball Corp. |
BLL, + 0.64% |
22,060 | 44% | 57% | $ 65.90 | $ 64.67 | -2% |
| AeroSystems Spirit Inc. Holdings, Class A |
RPD -0.85% |
8,720 | 17% | 56% | $ 84.29 | $ 101.00 | 20% |
| BWX Technologies Inc. |
BWXT, + 0.74% |
4,609 | 28% | 56% | $ 48.44 | $ 57.44 | 19% |
| Kratos Defense and Security Solutions Inc. |
KTOS, -3.08% |
2,370 | 59% | 56% | $ 22.38 | $ 21.56 | -4% |
| Source: FactSet | |||||||
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