3 Aerospace and Defense Stocks that Can Protect Your Portfolio

Stocks to buy

The aerospace and defense stocks sector was a huge laggard in 2023, but investors might see an uptick in momentum this year. Geopolitical tensions across the globe, including the most recent Israel-Hamas War, highlight the importance of increased portfolio protection. Investors can never be sure what will happen next, and planning ahead might be the best long-term investment strategy.

The global aerospace and defense sector is set for rapid growth and is projected to soar to more than $1 trillion in market value by 2027. Growth will largely be attributed to a boost in spending for aircraft, missile defense systems, and weaponry. Now, investors can fortify their investment portfolios due to geopolitical uncertainties and market fluctuations. 

Below are the three best aerospace and defense stocks that can protect your portfolio in 2024!

Lockheed Martin (LMT)

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Lockheed Martin (NYSE:LMT) is an American aerospace and defense company headquartered in Maryland, United States. They are currently the world’s largest defense contractor and one of the United States government’s top defense contractors. 

Over the last year, the defense industry has underperformed the broader market. While the sector did see a pop at the start of the Israel-Hamas War, underlying fundamentals have kept the sector from maintaining steam. This is because Wall Street is more excited about the prospects of interest rate cuts in 2024, fueling demand for enterprise software applications and artificial intelligence. 

However, Lockheed Martin still holds a promising future ahead. The company manufactures the F-35 Joint Strike Fighter Jet, among other prominent missile and defense systems. In Q3 2023, the company maintained a robust backlog of $156 billion, with new contract awards expected to extend into FY24. While revenue and EPS have stagnated, Lockheed Martin remains one of the best defense stocks to weather the storm.

Science Applications International (SAIC)

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Science Applications International (NYSE:SAIC) is an under-the-radar aerospace and defense stock you’ve probably never heard of. Over the last five years, the company has seen an acceleration in EPS growth, which could extend into FY25. 

Science Applications International is a leading enterprise software and IT company providing innovative solutions for the aerospace, defense, civilian and intelligence markets. This includes a cybersecurity portfolio, cloud solutions and digital transformation services. The company also crafted a robust artificial intelligence strategy after acquiring Korverse in April 2021

In their recent quarterly financial results, Science Applications International’s revenue growth was flat year-over-year. However, net income and EPS rose 16% and 21% YOY, respectively. They maintain a backlog of approximately $23.1 billion, of which $4.0 billion was funded. With new data and features to scale LLMs on Tenjin, this stock could be the next sleeper AI-powered defense stock for 2024.

CACI International (CACI)

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CACI International (NASDAQ:CACI) is one of the best aerospace stocks to consider for 2024. They closed off a strong fiscal year in FY23, and management is bullish on their ability to deliver sustainable long-term revenue, EPS and cash flow generation.

CACI International provides a wide range of services for branches of the U.S. federal government. Their products include advanced electronic warfare, electromagnetic pulse protection, and enterprise cloud security solutions. Over the last decade, the company’s EPS has grown substantially, and growth is expected to continue into FY24. 

In Q1 FY24, CACI International’s revenue grew 15% YOY to $1.85 billion. Earnings Per Share (EPS) was flat year-over-year, with FCF down 39%. The company is seeing strong service demand, with new contract awards totaling $3.1 billion in the first quarter. Additionally, they raised their revenue, adjusted EPS and FCF guidance for FY24, making it one of the best defense stocks to buy for 2024.

On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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