The recent events in Afghanistan have involved aircraft like the C130 and the Black Hawk. Both have been in the news for different reasons. The C130 is a heavy-duty military cargo aircraft that is a workhorse for evacuations and the movement of heavy military equipment. The Black Hawk is a fighter helicopter that the Taliban regime appears to have gotten its hands on. Regardless of the contrast in contexts in which these two aircraft are discussed, they both are made by US defense major Lockheed Martin. The defense industry is often at the cutting edge of technology and innovation. It also benefits from a stable demand as defense spending does not vary greatly with economic cycles and market downturns. If you think it’s 2021 buy aerospace stocks, then you will want to recognize that aerospace companies can have a defense segment and a commercial segment.
Aerospace Companies And Clients
Aerospace companies are not just the ones that work on defense. Some businesses also serve the huge commercial aviation industry. Think about all the airlines that fly in the US and across the world. They have aircraft that need maintenance and spares. Companies like Boeing and Airbus manufacture commercial aircraft. They have an army of suppliers that have to conform to high quality and performance benchmarks. So, there are a wide variety of businesses within the aerospace industry. Some businesses serve both the defense sector as well as the commercial sector. Companies that were heavily concentrated on the commercial side had a relatively tougher time during the pandemic. However, when economic growth is strong and the commercial aviation industry is riding high, those companies with a large proportion of revenue from the commercial side tend to perform well. Lockheed Martin is among the options for the top aerospace stock 2021.
The positive aspect of defense-focused companies is that their clients are usually government agencies and institutions. So, demand tends to be stable and recession-proof. As a result, Lockheed Martin’s stock has grown at a robust rate. It has gone from a price of around $69 to over $360 in 10 years.