Textron Inc. (TXT): One of the Top Defense Stock Picks from the Goldman Sachs Portfolio
We recently published a list of Goldman Sachs Defense Stocks: Top 12 Stock Picks. In this article, we will take a look at where Textron Inc. (NYSE:TXT) stands against other top defense stock picks from the Goldman Sachs Portfolio.
After a subdued start to the year, American defense stocks are beginning to see improved returns. Investors are buoyed by President Trump's plans for a $1 trillion defense budget for fiscal 2026, adding to the momentum from last month's unveiling of the F-47 and announcement to resurrect the country's shipbuilding industry.
READ ALSO: 10 Best Mid Cap Defense Stocks to Buy According to Analysts and 10 Best Performing Defense Stocks So Far in 2025.
The sector has received another boost after market chatter that tariff negotiations to address trade imbalances could include commitments from foreign countries to buy weapons from the US. In a statement released on April 8, Vietnam's prime minister asked for a 45-day delay in the imposition of tariffs and stated his country would buy more American goods, including weapons, to tackle the trade gap.
On April 11, Goldman analyst Noah Poponak adjusted his ratings and price targets for defense stocks, and the most notable adjustment was a prominent Navy shipbuilder receiving a double upgrade on the back of an executive order signed by Trump to revitalize the sector. Poponak expects the stock to benefit, with shipbuilding expected to be a high priority within the defense budget.
The firm is known for its expertise in stock recommendations, helping investors identify high-potential companies. GS boasts a vast network of analysts, covers a wide range of stocks. It also has a research team led by analysts and economists from around the world, offering insights on the economy and the broader market.
In a report released in March this year, Goldman Sachs Research projected a significant increase in defense spending by EU member nations. Military expenditure in the euro area accounted for 1.8% of the GDP in 2024, and is projected to rise to 2.4% by 2027. The firm's analysts estimate the increased spending to positively impact GDP growth, with every €100 spent on defense to boost GDP by approximately €50.
Defense stocks have rallied in Europe this year, as regional capitals unlocked billions to supercharge their militaries. While recent tariffs have sparked a major plunge in shares over the past couple of weeks, this has been a year to remember for several European defense contractors, with significant returns so far in 2025.
With that said, let's head over to the list of the top defense picks from the Goldman Sachs stock portfolio.
A military cargo plane landing at its destination, signifying the strength of its defense arm.
For this article, we scanned Goldman Sachs' 13F portfolio as of December 31, 2024. From there, we picked the top 12 defense stocks according to their stake value and ranked them in ascending order.
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).
Stake Value as of Q4 2024: $85,886,997
Textron Inc. (NYSE:TXT) manufactures products for consumers across several industries, through its six business segments: Bell, Textron Aviation, Textron eAviation, Textron Systems, Industrial, and Finance. It is one of the top defense picks from the Goldman Sachs stock portfolio.
On April 8, Textron Inc. (NYSE:TXT) announced that Textron Systems was awarded a three-year, $100 million contract from the Naval Sea Systems Command (NAVSEA) to perform payload integration and software support activity for the Mine Countermeasures (MCM) Unmanned Surface Vehicle (USV). Under the agreement, the company will also be responsible for testing and demonstration work on potential future mission systems.
Textron Inc. (NYSE:TXT) is an important player in America's defense industry. In November last year, the DoD awarded Textron Aviation a $277 million contract to produce 26 T-54A trainer aircraft for the Navy, Marine Corps, and Coast Guard, with an estimated completion date of September 2026.
The company is also working on the FTUAS Option 3 and Option 4 award for the US Army. Under the contract, awarded in May 2024, Textron Systems will complete flight and MOSA demonstrations and deliver an Aerosonde Mk. 4.8 Hybrid Quad uncrewed aircraft system to the Army for testing and evaluation.
However, Textron Inc. (NYSE:TXT)'s share price has declined 19% over the past three months, after a significant year-over-year dip in revenue for the fourth quarter of fiscal 2024. The top-line figure also missed Street estimates. The company is expected to report Q1 FY25 results on April 24.
Overall, TXT ranks 12th among the Goldman Sachs Defense Stocks: Top 12 Stock Picks. While we acknowledge the potential of defense companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than TXT but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
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