Three defense and aerospace stocks touched buy points Tuesday, as the industry group trades at record highs on new military and civilian deals.
Drone maker AeroVironment rose past the 295.90 buy point of a cup base. The stock traded below the entry Tuesday afternoon as the stock market faded. AeroVironment shares may need to pause after rallying 34% in little more than two weeks.
Despite the price fade and an uneven earnings performance, AeroVironment remains an industry leader with a potent 95 Composite Rating. Last week, BofA Securities initiated coverage with a buy rating and $300 price target. Analysts cited the Pentagon's push for drone warfare, TheFly.com reported. AeroVironment also makes space communication technologies.
Teledyne Technologies is toying with a 570.56 buy point from a base-on-base formation. Volume is running below average, and the relative strength line lags the share price. So Teledyne stock may also be set to pause.
The company makes sensors and electronics, some that are used outside the military, such as in health care, semiconductor foundries and scientific applications. Thousand Oaks, Calif.-based Teledyne has a 93 Composite Rating.
Howmet Aerospace briefly climbed above the 193.26 buy point of a flat base, but the stock faded amid light volume. The company, which makes engineered metal products for aviation and trucking, has a 96 Composite Rating. It has one of the best earnings performances in the group, with EPS gains of 36% to 54% the past four quarters.
The stock has soared more than 400% from an initial breakout in November 2022. A double-bottom base in February-April of this year undercut a previous base, which reset the base count. The current base is second stage, which suggests the stock may have more room to run.
Defense Stocks Near The Top
The industry group is up 28% year to date, ranked No. 28 out of the 197 groups tracked by IBD. Conflicts in Ukraine, the Middle East and other flashpoints around the globe have helped keep military contractors busy. Another factor: European leaders are raising their defense spending this year after President Donald Trump scaled back NATO commitments.
On the civilian front, airlines continue to replace older aircraft with models that offer better fuel efficiency.
On Monday, Boeing announced Uzbekistan Airways agreed to purchase 22 of its 787 Dreamliners. The company also is nearing a deal to sell as many as 500 planes to China, Bloomberg reported. Boeing is slowly increasing production after grappling with quality issues and delays in some programs. The stock rose 2% Tuesday afternoon and appears to be forming a shallow double-bottom base.
Bloomberg also reported that Turkey plans to buy hundreds of Boeing airliners along with fighter jets from Lockheed Martin. Lockheed stock is down about 1% year to date, although it climbed above its 200-day moving average on Sept. 11. Its Composite Rating is 60.
Other Defense Stocks To Watch
Israel-based Elbit Systems is trying to get back above the 494.32 buy point of an ascending base. Curtis Wright regained its most recent buy point. It's now slightly above the 517.09 entry from a flat base the stock first cleared on Sept. 15.
Northrop Grumman is testing support at the 10-week moving average. The stock is on track for a fourth straight down week and its RS line is lagging.
GE Aerospace is the largest defense and aerospace stock by market cap, which now exceeds $9.17 billion. The stock is trading at all-time highs and extended after finding support at the 10-week moving average the past few months. Its Composite Rating is 98, second highest in the group.
Karman Space & Defense has the aerospace group's highest Composite Rating, a 99. That lofty mark is thanks to a six-week 57% price surge and outstanding growth. EPS fell 75% in last year's fourth quarter but rebounded 67% and 233% the next two periods, according to IBD MarketSurge. Karman provides systems and technology for defense and space missions.
Among other defense stocks to watch, Spirit AeroSystems, drone maker Draganfly, aircraft maker Textron, aviation and industrial components maker Woodward and shipbuilder Huntington Ingalls are forming bases. All are flat bases, except Draganfly, which is in a 47%-deep cup and trades under 7 a share.
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Brazil-based aircraft manufacturer Embraer is near its 60.42 buy point. The company has been hit with tariffs in the U.S. Its Composite Rating is 88. On Monday, Latam Airlines Group announced it will buy two dozen E195-E2 jetliners, with options for 50 more.
On Monday, Kratos became part of the S&P MidCap 400 Index, after its market cap (now above $14 billion) got too big for the S&P SmallCap 600 Index. The drone and defense systems maker is well extended as it trades at the highest point since 2005.
