No matter what period in history you look at, there is almost always some sort of global conflict. While nobody wants to see protracted and deadly wars, the reality is that most major countries have adopted a peace through strength posture. For investors looking for sectors to shift to as the aging bull market slows, it always makes sense to have positions in the defense and aerospace arena.
A new research report from the defense and aerospace team at Truist Securities makes a solid case that the sector could outperform the rest of 2021 and into next year. The analysts previewed several top companies, and we screened the research looking for the large-capitalization leaders that were rated Buy. Four industry leaders look like solid picks for long-term growth investors.
The analysts are positive on the U.S. Department of Defense budget for 2022 and noted this:
Our initial examination of the budget appears favorable. We believe the shift away from the procurement of legacy platforms in support of new R&D programs will potentially create margin headwinds for some contractors, but in aggregate we believe fears of large-scale Blue Wave defense spending cuts look to have been overblown considering the proposed 2% CAGR through 2026. Moreover, we expect that favorable spending trends in support of space, cyber, microelectronics, hypersonics, and next-gen unmanned systems should provide tailwinds for our defense coverage universe.
While all four stocks are rated Buy at Truist Securities, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This under-the-radar stock has solid upside potential. BWX Technologies Inc. (NYSE: BWXT) manufactures and sells nuclear components in the United States, Canada and internationally. Its Nuclear Operations Group segment offers nuclear components, reactors, assemblies and fuel for the U.S. Department of Energy National Nuclear Security Administration’s Naval Nuclear Propulsion Program and other uses. It also offers close-tolerance equipment for nuclear applications; research reactor fuel elements for colleges, universities and national laboratories; and components for defense applications.