3 Top-Notch Aerospace & Defense Stocks To Buy In 2018

Courtesy of these developments, major defense contractors can expect a slew of contracts from the Pentagon. On the first day of 2018, Raytheon won a deal worth $333.4 million and Boeing secured a $193.6-million contract. With more such contracts anticipated, we expect major defense stocks to maintain the rally in 2018.

In the second half of 2017, we have seen a wave of mergers between big aerospace and defense companies in a bid to fend off competition, restructure business models as well as expand core operations and product lines. United Technologies agreed to take over Rockwell Collins for $30 billion, while Northrop Grumman is set to buy Orbital ATK for $9.2 billion. While the deal will make United Technologies one of the world's largest aircraft equipment manufacturers, on the other hand, Northrop Grumman’s product line will benefit from Orbital's rocket motors, missiles, and electro-optical countermeasure equipment. Slated to wrap up in 2018, synergies from these mega deals are sure to benefit the sector.

Additionally, emerging nations like Japan and India as well as European countries are raising their defense budgets on account of the widespread geopolitical uncertainties. As the United States is the largest supplier of defense equipment, it is, without doubt, a golden era for Aerospace & Defense stocks.

The Winning Strategy

In order to save investors the time-taking process of identifying key winners that crushed the market and are likely to gain further, we have created a screen using the Zacks Stock Screener.

Herein, we have zeroed in on three Aerospace stocks, which have been recording better-than-expected results and a long-term earnings growth rate of 10% or more. These stocks also boast a favorable Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Top Picks

Huntington Ingalls Industries, Inc. (HII - Free Report): The company designs, builds and maintains nuclear-powered ships such as aircraft carriers and submarines, and non-nuclear ships. The stock has a long-term earnings growth rate of 15% and has delivered an average positive earnings surprise of 14.2% in the trailing four quarters.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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