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Is RTX Corporation (RTX) the Best Defense Stock to Buy According to Billionaires?
We recently published a list of 13 Best Defense Stocks to Buy According to Billionaires. In this article, we are going to take a look at where RTX Corporation (NYSE:RTX) stands against other best defense stocks to buy according to billionaires.
Defense stocks wobbled over the past week after a contentious meeting at the Oval Office between President Trump and the visiting Ukrainian leader, Volodymyr Zelensky as investors hoped for the US-Ukraine minerals deal to be signed.
The sector has struggled since Trump’s return to the White House, amid mixed statements on military expenditure throughout his campaign and the early days of his second stint. Shares fell sharply on February 13 after the President hinted at cutting defense spending in the future. The creation of DOGE is also reshaping investors’ views of the industry.
In contrast, European defense stocks have rallied this year as governments faced pressures to increase military expenditure. Several stocks registered double-digit growth during the week of March 3, with some even reaching record highs. Investor sentiment picked up after the European Summit in London, where leaders from the EU and NATO met to express their support for Ukraine, following the recent Zelensky-Trump spat.
Washington has repeatedly called for European countries to spend more on defense, while stressing that the US could no longer foot the bill. EU leaders met in Brussels this Thursday to discuss the ‘ReArm Europe Plan’, which will allow the bloc to mobilize funds up to $860 million through bonds and relaxed rules on borrowing and spending.
European countries are also ramping up defense on an individual-level. A conservative victory in Germany, signaling the shift to the right in Berlin, is also adding to the momentum. According to a Reuters report, parties in talks to form the nation’s next government are already considering setting up a defense fund. Friedrich Merz, Germany’s next chancellor-in-waiting, has also vowed to relax the country’s strict borrowing rules.
Peter Schaffrik, Global Macro Strategist, at RBC Capital Markets stated the following on the ongoing situation:
It is an inflection point and Europe realises it needs to do the heavy lifting. The German elections have opened the door for more spending. The whole Zelensky-Trump meltdown has fast forwarded everything.
Methodology
For this article, we scanned Insider Monkey’s Q4 2024 proprietary database of billionaires’ stock holdings and identified defense stocks from the list. From there, we picked the top 13 stocks with the highest number of billionaires having a stake in them. Where two or more stocks were tied on billionaire sentiment, we used the dollar value of billionaire holdings as a tiebreaker between them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is RTX Corporation (RTX) the Best Defense Stock to Buy According to Billionaires?
An aerial view of a commercial jetliner in flight, its airframe glinting in the sun.
RTX Corporation (NYSE:RTX) is a giant in the global aerospace and defense industry, providing systems and services to commercial, military, and government clients. The company operates through three main businesses: Collins Aerospace, Pratt & Whitney, and Raytheon.
According to Insider Monkey’s database for Q4 2024, 17 billionaires had investments in the company, with a combined stake value of more than $3.13 billion. Regular awards of high-value contracts have made it an attractive stock for investors.
Earlier this year, RTX Corporation (NYSE:RTX) clinched a $946 million deal to provide additional Patriot air and missile defense systems to Romania, inclusive of radars, missiles, and control stations. During the fourth quarter of 2024, the company was awarded two contracts from the US Navy valued at over $1.3 billion for the AIM-9X SIDEWINDER missiles and the Next Generation Jammer Mid-Band (NGJ-MB) system.
On February 28, RTX Corporation (NYSE:RTX) announced that its Collins Aerospace business had successfully tested a demonstrator of the Enhanced Power and Cooling System, which will offer increased cooling to enhance capabilities of the F-35. The new technology is set to rival Honeywell as the supplier of a critical onboard system for the stealth fighter.
During its Q4 2024 earnings call on January 28, RTX Corporation (NYSE:RTX) reported stellar results for fiscal 2024, with adjusted sales of $80.8 billion, growing 9% year-over-year. Adjusted EPS was logged at $5.73, up 13% from last year. The company returned $3.7 billion of capital to shareholders during the year and is heading into fiscal 2025 with a backlog of $218 billion.
RTX Corporation (NYSE:RTX) is one of the best defense stocks to buy now, with Wall Street analysts having a consensus Buy rating for the stock with an average share price upside potential of 10%.
Overall, RTX ranks 2nd on our list of best defense stocks to buy according to billionaires. While we acknowledge the potential of RTX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
