The aerospace industry primarily surrounds companies involved in the manufacturing of aircraft components and vehicles that travel into and beyond the earth’s atmosphere. Aerospace stocks range from private firms focused on commercial space travel to large defense firms that supply our military. Accordingly, these companies are all determined to provide innovative products and services that address the future of flight.
What does that future look like? The answer involves anything from hydrogen-powered vehicles to wing design that goes beyond traditional norms, supersonic flight, and advanced materials that push new boundaries.
Indeed, aerospace stocks provide investors with potential exposure to an inherently fascinating field that feels poised for massive growth. As humans continue to do what we do best – explore and push boundaries – these aerospace stocks could lead the way higher.
Without further ado, let’s dive into three of the top aerospace stocks investors ought to consider right now.
| TXT | Textron | $66.16 |
| ESLT | Elbit Systems | $171.58 |
| SPR | Spirit AeroSystems | $29.72 |
| AVAV | AeroVironment | $90.39 |
| RKLB | Rocket Lab USA | $3.88 |
| TGI | Triumph Group | $10.59 |
| ACHR | Archer Aviation | $2.53 |
Textron (TXT)
Source: Shutterstock
Price Target: $83.41 (20.3% Upside)
First on this list of aerospace stocks to buy is Textron (NYSE:TXT), a family of 6 businesses primarily focused on aviation, specialized terrestrial vehicles, and turf care. Many aviation stock fans will recognize its commercial and military helicopter brand, Bell. Likewise, its Cessna and Beechcraft planes are well-known names in the aviation industry.
Textron continues to develop its aerospace capabilities. In September, it entered into an agreement with Sierra Nevada Corporation to co-develop a High-Speed Vertical Takeoff and Landing (HSVTOL) aircraft. The aircraft has military applicability, rather than strict commercial aerospace use, and is designed to strengthen domestic operational capabilities.
Back in 2020, the company announced an apprenticeship program with Wichita State University Tech and the International Association of Machinists and Aerospace Workers (IAMAW). That program will train future workers in an area rich in aerospace talent and manufacturing.
Perhaps equally importantly, the company won a contract to replace the Army’s UH-40 Black Hawk helicopter in December with the Bell V-280 Valor. That $80 billion contract will stabilize revenues and beat out bids from larger contractors, including Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT).
Elbit Systems (ESLT)
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Price Target: $213.33 (22.3% Upside)
Elbit Systems (NASDAQ:ESLT) stock represents an Israeli-based firm operating in programmatic defense and homeland security. Those programs touch on all major military branches, including naval, terrestrial, aerial systems, and munitions, in the aerospace realm, including unmanned aircraft systems (UAS) and associated systems for their operation.
Elbit Systems’ unmanned vehicles comprise at least eight large aerial vehicles that fly long-range at high altitudes and cars that can be hand-launched by a single person. That vehicle, the Skylark I-LEX, can handle a 1.2 kg (2.6 lb) payload and has a 40 km (25 miles) range. The Starliner Hermes, its largest craft, can travel for 36 hours continuously and carry a 450 kg (990 lb.) payload.
Elbit Systems Space IMINT Systems division produces space telescopes, cameras, and other space-borne electro-optic observation systems. In short, ESLT stock is a lesser-known aerospace name, but one with an attractive upside that is developing futuristic technology that leads the sector. The company also produces composite parts for the F-35 fighter from its Cyclone materials division.
Spirit AeroSystems (SPR)
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Price Target: $40.14 (31.7% Upside)
Spirit AeroSystems’ (NYSE:SPR) primary business is manufacturing aluminum and advanced composite materials. The company stock is bolstered by its capabilities as one of the largest aerostructure manufacturers to commercial airplane firms.
The company represents the growth side of aerospace and defense stocks. It posted a loss of $546 million in 2022, up from $541 million in 2021. But, as mentioned, Spirit AeroSystems boasts impressive growth numbers. Revenues increased by 27% in 2022, reaching $5.06 billion. In Q4, they improved by 23%, rising to $1.32 billion.
CEO Tom Gentile noted supply chain issues and labor losses contributing to the less-than-stellar operational figures. Yet, investors will likely be able to sweep those losses aside, given that the company has a vital catalyst in its favor – the 737 program. Spirit AeroSystems is on track to deliver 420 shipsets in 2023. A shipset amounts to the total product required to manufacture a single plane.
AeroVironment (AVAV)
Source: Shutterstock
Price Target: $104.83 (18.1% Upside)
Investors seeking stocks heavily involved with unmanned aircraft solutions (UAS) will like AeroVironment (NASDAQ:AVAV). The company is a global leader in intelligent, multi-domain robotic systems. In layman’s terms, it makes small and medium-range drones, missiles, and satellites.
The company is a significant supplier to Ukraine in the war against Russia. That connection has substantially boosted business for AeroVironment, with revenues jumping 13% in 2022, to $354.5 million. In Q3, which ended in late January of this year, the increase was even more pronounced. Revenues rose 49% to $134.4 million.
That growth is expected to continue throughout 2023, with revenues expected to come in between $510 and $525 million. That projected growth will be a significant catalyst for investors. Moreover, investors should understand that the company is approaching breakeven. Several of the company’s uncrewed aircraft are featuring heavily in the Ukraine conflict, and have been a significant force in surveilling enemy soldiers and delivering payloads.
Rocket Lab USA (RKLB)
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Price Target: $9.33 (142.3% Upside)
Rocket Lab USA (NASDAQ:RKLB) is a reasonable choice for penny stock enthusiasts seeking aerospace plays. The Long Beach, California firm engineers rocket launch and control systems for space and defense clientele. It also provides on-orbit management solutions that promise to lower space access costs.
Indeed, 2022 was a big year for Rocket Lab USA. The company successfully launched 100% of its more than 42 commercial satellites into precise orbits. Its Electron rockets are the second-most frequently used vehicles to propel satellites into orbit. This year, one such rocket was used to launch a successful moon mission for NASA. The company operates three launchpads from the USA and New Zealand.
Rocket Lab USA currently boasts 25+ spacecraft in development, which includes a NASA mission to Mars. Its backlog stood at $503.6 million at the end of Q4. That positive momentum, and an impressive projected book of business, make it a stock with significant upside from here.
Triumph Group (TGI)
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Price Target: $13.2 (17.2% Upside)
Aerostructure and aircraft component firm Triumph Group (NYSE:TGI) is another small name stock with plenty of upside potential. It serves many of the world’s largest airline and aerospace firms. For example, the company recently won a contract to supply door actuator cables to Airbus. Its helicopter main and tail rotor controls business was also recently awarded a developmental contract.
In my mind, its recent turnaround makes Triumph Group an attractive investment. The company drew down liquidity from $240.87 million to $116.4 million between March and Dec. 31 of last year. The top-line result of that move appears a bit deceptive, as revenues declined slightly to $985.84 million.
However, the company has pivoted from a $32.18 million loss at the end of 2021 to a $107.14 million net gain at the end of 2022. Its operations are in much better order, and it continues to win contracts with significant firms, which are major positives.
Archer Aviation (ACHR)
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Price Target: $9.40 (209.2% Upside)
Archer Aviation (NYSE:ACHR) is a stock for investors in the electric vertical takeoff and landing (eVTOL) space. The company unveiled its Midnight production aircraft in November. That vehicle is close to final assembly.
That’s where investors will be placing their money – the production of the Midnight eVTOL. Archer Aviation is currently constructing its volume production plant in Covington, GA. And the company has developed a strong relationship with Stellantis (NYSE:STLA), which could be instrumental.
So, it’s an early-stage bet that the company can successfully manufacture and commercialize its vehicles. High risk? Sure. But the payoff potential is evident as well.
Unsurprisingly, Archer Aviation remains pre-revenue, given that it is on the cusp of production. It will be a race against using current investments to develop the business to create future revenue streams. That means leveraging $531.2 million in liquidity for a company that burned through $347.4 million in 2022.
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On the date of publication, Alex Sirois 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.
