In light of the 50th anniversary of the Apollo 11 launch, the beginning of a historic mission to land U.S. astronauts on the moon, the five most broadly held aerospace and defense companies as of March 2019 are United Technologies Corp. (UTX, Financial), Boeing Co. (BA, Financial), General Dynamics Corp. (GD, Financial), Raytheon Co. (RTN, Financial) and Lockheed Martin Corp. (LMT, Financial).
According to CBS News, Apollo 11 astronauts Neil Armstrong, Edwin “Buzz” Aldrin and Michael Collins launched their space voyage to the moon at 9:32 a.m. on July 16, 1969 and set foot on the moon four days later. CBS News anchor Walter Cronkite delivered a “groundbreaking moment in broadcast television” with his news coverage on the event.
Aerospace and defense industry overview
Like its name suggests, the aerospace and defense industry serves two major markets: aerospace, which includes the production and sale of aircraft, and defense, which includes the production and sale of military weapons and systems. The aerospace sector, according to Investopedia, supplies markets like space travel and air travel.
While the industry is not as sensitive to changes in the business cycle as industries like financial services and consumer discretionary are, the aerospace and defense industry can still be sensitive to changes in the war cycle: During a war, demand for military weapons, aircraft and systems increases. Likewise, during peaceful times, demand for such products decreases.
GuruFocus’ Aggregated Portfolio of Gurus allows users to view the most-broadly-held stocks among mutual fund and hedge fund gurus. The page allows users to view stocks within a specific sector or market cap range.
United Technologies
Most of the hedge fund gurus have not released their June quarter portfolios yet as the deadline is 45 days after quarter-end. As of the March quarter, 24 gurus own shares of United Technologies with a combined weight of 54.54%.
The Farmington, Connecticut-based company produces a wide variety of aerospace components and systems through businesses like UTC Aerospace Systems and Pratt & Whitney. GuruFocus ranks United Technologies’ profitability 7 out of 10 on several positive signs, which include operating margins outperforming 69.57% of global competitors and a Joel Greenblatt (Trades, Portfolio) return on capital outperforming 91.36% of global competitors. Additionally, United Technologies’ business predictability ranks three stars on consistent revenue growth over the past 10 years.
Activist investors Bill Ackman (Trades, Portfolio) and Daniel Loeb (Trades, Portfolio) continue owning shares of United Technologies.
Boeing
Nineteen gurus own shares of Boeing with a combined weight of 8.43%.
The Dow Jones Industrial Average closed at 27,335.63, down 23.53 points from Monday’s close of 27,359.16. Dow component Boeing closed at $362.75, up 34 cents from the previous close of $361.52.
Harbor Capital Appreciation Fund manager Spiros Segalas (Trades, Portfolio) said in his first-quarter shareholder letter that Boeing posted a double-digit gain despite the sharp price decline in March due to concerns regarding the Boeing 737 Max in light of two crashes. Despite this, Segalas believes the fund’s long-term fundamental expectations of the company “remain intact.”
GuruFocus ranks Boeing’s profitability 8 out of 10 on several positive indicators, which include expanding profit margins and a Greenblatt return on capital that outperforms 91.98% of global competitors. Additionally, the company’s business predictability ranks 4.5 stars out of five on strong and consistent revenue and earnings growth over the past 10 years.
General Dynamics
Seventeen gurus own shares of General Dynamics with a combined weight of 5.54%.
The Falls Church, Virginia-based company manufactures submarines, armored vehicles, information technology systems and Gulfstream business jets. GuruFocus ranks the company’s profitability 6 out of 10: Even though the company’s three-year revenue growth rate of 4.40% underperforms 53.15% of global competitors, General Dynamics’ operating margin has averaged approximately a 0.90% increase per year over the past five years and is outperforming 65% of global competitors.
Raytheon
Fifteen gurus own shares of Raytheon with a combined weight of 4%.
The Waltham, Massachusetts-based company operates several business segments, which include integrated defense systems, intelligence and information, missile systems and space and airborne systems. Following its merger with United Technologies, Raytheon expects to consolidate the integrated defense systems segment with the missile systems segment and the intelligence and information segment with the space and airborne systems segment.
GuruFocus ranks Raytheon’s profitability 8 out of 10 on several positive signs, which include expanding profit margins, a dividend yield near a three-year high and returns on assets outperforming 85.06% of global competitors. Additionally, the company’s business predictability ranks five stars on strong and consistent revenue and earnings growth over the past 10 years.
Lockheed Martin
Fourteen gurus own shares of Lockheed Martin with a combined weight of 3.89%.
The Bethesda, Massachusetts-based company operates several defense businesses, including aeronautics, space systems and rotary and mission systems. GuruFocus ranks Lockheed Martin’s profitability 8 out of 10 on several positive indicators, which include a strong Piotroski F-score of 7 and operating margins that have increased 5.50% per year, on average, over the past five years. Additionally, the company’s business predictability ranks four stars out of five on strong revenue and earnings growth over the past 10 years.
Disclosure: No positions.
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