Aerospace & Defense

Goldman Sachs Says 3 Aerospace and Defense Stocks May Be the Best Offense in 2022

With a history of innovation spanning 97 years, Raytheon provides state-of-the-art electronics, mission systems integration, C5I products and services, sensing, effects and mission support for customers in more than 80 countries.

In 2019, United Technologies and Raytheon agreed to merge their businesses to create a new aerospace and defense powerhouse. The two companies received unanimous approval from their respective boards, and the merger is finally complete, with the new company now called Raytheon Technologies.

The Goldman Sachs team remains positive and said this in the report:

This high quality aftermarket and defense driven business remains inexpensive on longer-term normalized numbers, the path to which is becoming increasingly clear. We see aftermarket and narrow body OE recovery driving accelerating margins in 2022, with continued growth in the Defense business.

Investors in Raytheon Technologies stock receive a 2.42% dividend. Goldman Sachs has a $104 price objective, while the consensus target is $103.65. Shares closed at $84.33 on Monday.

Textron

This is another industry giant that offers solid upside for investors. Textron Inc. (NYSE: TXT) is a conglomerate with the following operating segments:

  • Textron Aviation manufactures light-to-medium-sized aircraft.
  • Bell Helicopter.
  • Textron Systems.
  • Industrial Products manufactures machinery and equipment for golf/turf, wire and cable installation systems, plastic fuel tanks (Kautex), pumps, gears and gearboxes.
  • Textron Financial is a commercial lending operation that primarily provides equipment financing.

The company has a very solid new product pipeline, and the analysts feel the company is demonstrating that new products are the superior solution to combating tough end markets. They said this about the company:

In a structurally stronger business jet end-market, we see TXT well positioned to capitalize on higher volume and better pricing particularly in light/mid cabin aircraft. We also see upside drivers in the other businesses. With shares still trading at a sizable valuation discount to other aerospace companies, and consensus estimates that look too low, we see meaningful upside in the stock.

Shareholders receive just a 0.12% dividend. The $91 Goldman Sachs price target is well above the $86.00 consensus target. Textron stock closed on Monday at $73.13.


These three top stocks are also among the top selections at Goldman Sachs. While they are not as exciting perhaps as momentum-juiced technology stocks, they have strong growth potential and will be standing long after many of the WallStreetBets stocks are in the Wall Street graveyard.

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