In times of peace, people on Wall Street might not pay much attention to Massachusetts-headquartered aerospace and defense conglomerate Raytheon Technologies (NYSE:RTX). Now that there’s geopolitical turmoil, however, suddenly RTX stock looks like a great investment.
Actually, it’s always been a solid portfolio holding. Defense-readiness has been a priority among each and every presidential administration — or at least, that’s what they claim.
The good news is that you don’t have to pick a political side to benefit from the potential upside in RTX stock. When defense become a national and international priority, defensive names like Raytheon can add ballast to practically anyone’s portfolio.
At the end of the day, you don’t have to dump all of your stocks when crisis events happen. Instead, you can turn to rock-solid companies like Raytheon Technologies, which provide supreme shareholder value in good and not-so-good times.
RTX Stock at a Glance
Just recently, RTX stock quietly achieved a major milestone. Prior to the onset of the Covid-19 pandemic, the stock reached a peak of around $99.
It took a while, but the Raytheon share price finally reclaimed $99 in early March of 2022. Anyone who bought at the pandemic low of around $50 is probably about to double their money.
With RTX stock approximating the crucial $100 level, it’s time to start paying attention to the next milestone. $120 will be an ambitious but reasonable target price for the 2022, and then the shareholders can look forward to $135 and beyond.
By the way, Raytheon pays a decent dividend to its loyal investors. Currently, the company pays a forward annual dividend yield of 2%. It’s a nice bonus and should appeal to income-focused investors of all stripes.
Translating to Top-Line Growth
As the crisis unfolds between Russia and Ukraine, some financial experts are turning their attention to defense companies like Raytheon.
A representative example would be Jefferies analyst Chloe Lemarie, who connected the dots between Russia’s invasion of Ukraine and the potential windfall for defense businesses.
“With the open war situation in Ukraine, and NATO forces being deployed to neighboring countries, defense consumables (ammunition, countermeasures etc.) should be the first products to experience restocking and order uplift,” LeMarie explained.
The Jefferies analyst didn’t explicitly mention Raytheon here, but we can easily put two and two together. “This should translate into even greater top line-growth potential for the defense industry over the coming years,” LeMarie clarified.
Even prior to the invasion of Ukraine, Raytheon was thriving as an aerospace and defense business. In the fourth quarter of 2021, the company reported a robust $17 billion in sales and $2.2 billion in free cash flow.
Recent geopolitical events — tragic as they certainly are — could put Raytheon in a prime position to offer its services.
A U-Turn in Policy
“For the first time ever, the European Union will finance the purchase and delivery of weapons and other equipment to a country that is under attack.”
That’s a quote from European Commission President Ursula von der Leyen, in response to Russia’s continue attacks on Ukraine.
It’s a stark turnaround for some European countries, which have traditionally remained neutral during world conflicts. Even Sweden is getting involved, as it has announced its intention to send anti-tank weapons, body armor and helmets to Ukraine.
Meanwhile, German Chancellor Olaf Scholz has reportedly declared his country’s plans to increase its military/defense spending above 2% of its total gross domestic product (GDP). This spending, evidently, is set to commence with an investment of around $113 billion to bolster Germany’s military.
Other nations, from Canada to Romania, have also pledged to help equip Ukraine. The implications are crystal-clear: Raytheon’s investors might anticipate a ramp-up in defense-related demand.
The Takeaway for RTX Stock
It’s interesting to consider the idea of getting defensive by purchasing shares of a defense business.
Yet, given the current circumstances, it makes perfect sense. Raytheon was already a financially solid company. Now, however, there could be a fiscal windfall as nations offer military assistance to Ukraine.
Thus, you don’t have to panic-sell everything in your portfolio during times of crisis. In war and in peace, RTX stock lets you combat market volatility with confidence.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
