Military
4 Top Aerospace and Defense Stocks to Buy Now: The World Remains Very Dangerous
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With the precipitous drop in oil prices, many aerospace and defense investors are worried that the toll being taken by Middle East countries will slow what has been a consistent and important ongoing set of purchases from American companies. The fact is, while the deficits are jumping, the Middle East remains a hotbed of instability, and nations there are expected to continue to be buyers.
In a new research report, the analysts at RBC stay overweight on the sector and maintain that the strong demand for Western defense equipment should stay in place unabated. Middle East spending was a staggering $204 billion last year, which is up 8% since 2013, and the team at RBC expects this trend to continue.
Four large cap blue chip leaders are rated Outperform, with one them the top pick at RBC.
Raytheon
This company has a diversified mix of businesses. It posted solid fourth-quarter numbers, and it is the top pick at RBC as well. Raytheon Corp. (NYSE: RTN) is an industry leader in defense, government electronics, space, information technology and technical services. The company operates in four principal business segments: Integrated Defense Systems, Intelligence, Information and Services, Missile Systems, and Space and Airborne Systems.
The company is not only likely to benefit from domestic defense purchasing, but Raytheon has posted large contract sales to the Saudis over the past two years. Last year, Raytheon purchased privately held cybersecurity company Blackbird Technologies for about $420 million. The acquisition will help expand its surveillance and cybersecurity services to clients. Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as cybersecurity and a broad range of mission support services.
Raytheon investors are paid a solid 2.15% dividend. The RBC price target for the stock is $147, and the Thomson/First Call consensus price target is set at $140.13. The stock closed the day Tuesday at $125.22 per share.
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