3 Aerospace And Defense Stocks Worth Watching As Oil Driven Inflation Persists

Rising oil prices are feeding into inflation pressures in several regions, which keeps central banks focused on interest rates and highlights the importance of sectors tied to government and security spending. In that context, screens such as Aerospace And Defense are on the radar for investors who want exposure to companies linked to long term public budgets. This article walks through three stocks from the screener that may merit a closer look at this time.

The three Aerospace And Defense stocks below are only a small sample. The full screen highlights 73 more companies with equally compelling narratives that are not covered here. To go deeper into this investing idea, identify your preferred risk profile and analyze potential opportunities, head straight into the Aerospace And Defense screener.

Redwire (RDW)

Redwire is a pure play on space infrastructure, supplying hardware such as star trackers, sun sensors, antennas, spacecraft platforms and in space manufacturing and biotech facilities that sit directly on government and commercial missions. The company reports roughly US$208 million of revenue from its Space segment and about US$217 million from Defense Tech, so exposure is split between orbital systems and uncrewed or autonomous defense platforms. At a market cap of about US$2.7 billion, Redwire is a mid sized player with meaningful scale in the Aerospace and Defense supply chain.

Redwire gives you direct exposure to the build out of modern space infrastructure and defense tech, from phased array antennas for secure communications to uncrewed aerial systems and microgravity biotech platforms. Recent updates mention record backlog, new NATO and U.S. military contracts and facility expansions. Together, these factors can improve revenue visibility and support higher margin products over time. The flip side is clear. The company is still loss making, relies heavily on complex government programs, carries funding risk and has recently diluted shareholders. For investors evaluating that trade off within an aerospace focused portfolio, Redwire may warrant closer examination.

Redwire’s growing backlog and new defense contracts hint at an accelerating story that many investors may not have fully pieced together. Get the full context, including a crucial funding and dilution twist, in the 2 key rewards and 3 important warning signs (1 is major!)

General Electric (GE)

General Electric, now focused on GE Aerospace, is a major supplier of jet engines and related systems for both commercial airlines and military customers. This ties it directly to the Aerospace and Defense theme through its core propulsion and MRO activities. Most of its revenue comes from Commercial Engines & Services at about US$37.7b, with Defense & Propulsion Technologies contributing roughly US$11.5b and Corporate & Other about US$1.4b. At a market cap near US$355.4b, GE Aerospace is one of the larger listed aerospace engine and services platforms.

Investors looking at General Electric today are really assessing GE Aerospace, a focused engine and services company with a large installed base that supports long term maintenance and spare parts demand. Commercial Engines & Services and Defense & Propulsion Technologies together provide exposure to both airline traffic and government defense budgets, backed by a sizeable backlog and recent contract wins across civil and military programs. At the same time, high leverage and significant investment needs for new engine platforms and capacity leave the company exposed if aviation cycles turn or large programs face delays. That mix of recurring service cash flows, defense work and balance sheet risk is what makes GE worth a closer look for Aerospace and Defense focused portfolios.

GE Aerospace’s large installed base and long-term service work could be masking a very different risk-reward profile. Get the full story in the 2 key rewards and 1 important warning sign

Rocket Lab (RKLB)

Rocket Lab is a space company focused on launch services and space systems for commercial and government customers, which ties it directly into the Aerospace and Defense theme through its Electron and developing Neutron rockets, plus on-orbit and constellation management services. Most revenue currently comes from Space Systems at about US$544 million, with Launch Services contributing around US$225 million, showing that satellite and spacecraft solutions are now a larger part of the business than pure launches. At a market cap of roughly US$38.5b, Rocket Lab is a sizable listed player in the global space infrastructure arena.

Rocket Lab provides exposure to the hardware and services that keep modern defense and communications satellites in orbit, from frequent Electron launches to a growing portfolio of spacecraft, robotics and laser communications capabilities. The potential acquisition of Iridium and a backlog near US$2.36b indicate a multi-year revenue base tied closely to national security and space infrastructure, but the company is still loss making, carries funding and dilution risk, and is heavily dependent on getting Neutron flying smoothly. For investors willing to accept volatility and execution risk in return for a focused position in the space and defense ecosystem, Rocket Lab may merit further research.

Rocket Lab’s expanding space systems and launch backlog could be masking a very different risk profile. See how funding pressures, dilution risk and the Neutron wildcard all fit together in the 2 key rewards and 3 important warning signs

Seeking Fresh Alternatives Beyond Aerospace?

Markets move fast and the best breakout stories do not stay under the radar for long. Scan fresh ideas with real momentum before the crowd catches up and consider acting while opportunities are still developing.

• Spot companies where strong balance sheets may back current momentum by screening a curated list of solid balance sheet and fundamentals (52 results) while it still flies under the radar for most investors.
• Explore potential cash flow and yield trends by checking a hand picked universe of high payout companies through the 12 dividend fortresses before prices reflect the full story.
• Monitor possible sector rotations by scanning a focused set of AI infrastructure leaders using the 56 AI infrastructure stocks while these themes are still building steam.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com