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Yahoo
5 days ago
- Business
- Yahoo
RTX can get 'lion's share' of defense spending boosts: Strategist
In the latest installment of Yahoo Finance's Good Buy or Goodbye, Market Domination host Julie Hyman invites on Hennion & Walsh CIO Kevin Mahn to hear his perspective on the defense sector, explaining his bullish call on RTX Corporation (RTX) over its competitive advantage in missile defense systems and why he thinks investors should avoid Vertical Aerospace (EVTL). To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Don't forget to catch up on Good Buy or Goodbye. It's a big noisy universe of stocks out there. Welcome to goodbye or goodbye. Our goal to help cut through that noise to navigate the best moves for your portfolio. Today, we're diving into the aerospace and defense sector. I'm back here with Kevin Mann, Henning and Walsh CIO. Uh Kevin, thanks for sticking around as we talked about you like the defense sector, that much we know. And specifically, there's a stock you like in it and that is RTX. Yes, used to be known as Raytheon. Now, is known as RTX after some sort of restructuring. The stock is up some 30%. It's actually trading near a record. It's off that a little bit today, but pretty close to that record level still. So, within RTX, you still have Raytheon as a big part of it. So, talk to us about that. Yes. Correct. Yes. So, there's three different segments to RTX. One is Collins Aerospace, two is Pratt and Whitney, and three, of course, is Raytheon, the most appealing from an investment perspective. Why? Because they design and they manufacture air and missile defense systems. Think of the Iron Dome, similar to what Israel has and similar to what the Trump administration wants to build here. We believe they'll be a benefactor of all this increased defense spending with the US planning to spend up to a trillion dollars on defense in the upcoming budget, and we think RTX will will get a lion share of that money. Well, it sounds like you're not the only one who thinks this because the stock is like, I just pointed out, the stock has done very well over the past year and is near a record. So, do you think there is a momentum aspect to this? Absolutely. I think a large part of that goes with the defense spending outlays. What they're trying to build with the Iron Dome, and also this sector as a whole. You look at the number one performing sector in 2025, it's industrials. Guess where aerospace and defense falls under? Industrials. And that's what's driving it up. And there's other defense contractors that are going to benefit it as well, but I think RTX is particularly attractive. And then let's talk about some of the numbers around stock. The valuation 22.9 times four p, little little high, but it does pay a dividend of what is it? 1.9%. Yep. It does. Nearly 2%. So, you know, you get you get something for paying up for it. Absolutely. There's a lot of defense names right now that are trading at very high multiples. This is relatively in line with the S&P 500 from a current P perspective. And you get a dividend yield of nearly 2%, and the stock's up over 20% year to date, and there's likely to be more defense spending coming their way. I think investors should consider them. So let's, you know, we always like to we always like to look at what a potential risk is. In this case, you know, obviously, the bill is now being debated. We could see tweaks, we could see changes. How big of a risk do you think that is? I think it's a small risk, but it is a risk. And then going forward, yes, if we get the defense budget increased to 1 trillion for this year, does it stay at those levels or do they pair back and does RTX still benefit in future years? Uh the other thing I wanted to ask you about is competition here because we have had this sort of push within the federal government to be more efficient, to be more sort of tech tech forward, right? And you see some of the tech, some of the defense startups getting more attention. But do they compete sort of directly with RTX? How do they sort of all fit together? I would say what Raytheon has in terms of air and missile defense system is far and above beyond their competitors right now. That's right now. But there's other defense contractors that are very similar. Take Lockheed Martin, the manufacturer of the F-35 fighter jet, but they didn't win the contract for the new F-47, Boeing did. So, there's a lot of competition in this space right now as they try and build, make us safer, but do it much more efficiently and with less cost. Well, speaking of sort of startups within the aerospace realm, that's takes us to our goodbye, the stock that you're avoiding, Vertical Aerospace, EVTL is the ticker, which sort of stands for EVTOL, electric vehicle takeoff, vertical takeoff and landing here. So it's the sort of electric sort of more helicopter-like aircraft that we've talked about. The stock, as you can see here, is down over the past year. It's about 18%. So why don't you like this one? Never a good sign. They're not an approved defense contractor to the US Department of Defense, electric aviation right now. It may be the future, but it's not the present, and there's a lot of competition in this space. And as you'll see in the next two areas, they're burning through cash right now. The stock's down 52% year to date. It's not a good story right now, and I hope it turns for this company. Well, if it's not a defense play, could it eventually be a commercial play? Certainly could, but they have to become profitable first. They have to actually start signing some large commercial contracts, and then they have to actually have this technology, this new groundbreaking technology work. Um, and then if you look at how this stock has done, it's the opposite of the upward momentum that we saw with RTX. This stock, I mentioned, it's down 18% over the past 12 months. It's down a lot more just year to date. Absolutely. Just year to date, it's down over 50%. And what we saw with their first, or their their end of 2024 earnings, they lost a significant amount of money. You look at the forecast for Q2, they're expected to lose once again, about 43 cents per share on earnings. That's not a good sign for a company that's trying to become profitable. Yeah, as you say, they're not signing those contracts yet. So, I guess it goes without saying, they don't pay a dividend because they're not bringing anything in the door. They certainly pay the dividend. Weak balance sheet, not paying a dividend. It's it's hard to find anything to like with this stock right now. With the company and the idea and the concept makes a lot of sense, but they need to shore up their balance sheet. That's just so what could go right here, it could work out, right? So, as you mentioned, there are a number of companies that are attempting to do this. There's Vertical, there's the likes of Archer Aviation and Joby that are all sort of jockeying to be the first, you know, really dominate the company in this space, but they haven't got none of them have really gotten there yet, and maybe this one might be in third. I don't know. Yes. Yes. Possibly. I mean, we're in desperate need of alternative power solutions in aviation, in automotion, and across, I'd say, defense contracting, and even in AI. The concept makes sense to me. There's a lot of competition right now. They're burning through cash. The stock's down 52%. They're not forecasted to grow in their earnings. And then I looked at the outtakes of their Q1 earnings reports, and they said they had enough cash on hand to last through 2025. Sounds comforting, but there's only six more months left in 2025. So hopefully it turns around. I don't see them being a recognized defense contractor. Maybe they'll sign a large contract on the commercial side, and this will start to perform again, but not yet. Well, you don't own this one. I think it is fair to say you guys do own RTX. I do not. We do own RTX. Yes. All right. Sign in to access your portfolio
Yahoo
5 days ago
- Business
- Yahoo
RTX can get 'lion's share' of defense spending boosts: Strategist
In the latest installment of Yahoo Finance's Good Buy or Goodbye, Market Domination host Julie Hyman invites on Hennion & Walsh CIO Kevin Mahn to hear his perspective on the defense sector, explaining his bullish call on RTX Corporation (RTX) over its competitive advantage in missile defense systems and why he thinks investors should avoid Vertical Aerospace (EVTL). To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Don't forget to catch up on Good Buy or Goodbye. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
28-05-2025
- Business
- Yahoo
Macy's is in tight 'race to the bottom' with retail competitors
On the latest installment of Good Buy or Goodbye, Washington Crossing Advisors senior portfolio manager Chad Morganlander joins Market Domination host Julie Hyman to expand upon his bullish take on auto part retailer O'Reilly Automotive (ORLY) amid tariffs and his bearish view on Macy's (M) tied to the store's competition and debt holdings. Department store chain topped first quarter estimates on its top and bottom lines on Wednesday, posting revenue of $4.6 billion (vs. estimates of $4.46 billion) and adjusted earnings of $0.16 per share (vs. estimates of $0.14). On top of its quarterly results, Macy's cut its full-year profit outlook, citing tariff pressures and a more cautious consumer. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Don't forget to catch up on more Good Buy or Goodbye. Sign in to access your portfolio
Yahoo
27-05-2025
- Automotive
- Yahoo
For EV stocks, buy Rivian over Stellantis: Good Buy or Goodbye
In this segment of Good Buy or Goodbye, GraniteShares founder and CEO Will Rhind joins Market Domination host Josh Lipton to share his best and worst stock picks. Rhind explains why he thinks Rivian (RIVN) could be a smart electric vehicle (EV) bet as tariffs loom over the industry, and why he's steering clear of Stellantis (STLA). To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Don't forget to catch up on Good Buy or Goodbye. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
20-05-2025
- Business
- Yahoo
Enterprise Bank is defensive, Wingstop is overvalued: Analyst
On the latest installment of Good Buy or Goodbye, Commerce Street Holdings CEO Dory Wiley joins Market Domination host Julie Hyman to share his top stock pick and insights into why he is favoring Enterprise Financial Services (EFSC) while stepping back from Wingstop (WING). To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Don't forget to catch up on Good Buy or Goodbye. It's a big noisy universe of stocks out there. Welcome to Goodbye or Good Buy. Our goal to help cut through that noise to navigate the best moves for your portfolio. Today we're taking a look of growth prospects for some Nasdaq names. I'm here with Commerce Street Holdings CEO, Dory Wiley, who is here with us in the studio. Special treat because usually we talk to you remotely Dory. So thanks for being here. Let's get to the stock that you like. It is called Enterprise Financial Services. It is a regional bank based in St. Louis. We're looking at the one-year chart here. And over the past one year, it's actually up 36% or so, although it's dipped a little bit this year. So let's get into it and why you like it. First of all, you say it is undervalued growth here. Talk me through what that means in this case. Absolutely, investors always looking for growth at a reasonable price, right? And that's what this stock gives you especially in the banking sector. It's a very solid company. They've got really good growth, 15 to 16%. Tangible book value per share or earnings per share growth, year in year out, and they're they've just got a great track record of it and they're only at 10 times forward PE which is much below its peers. So, it's got a faster growth rate than its peers. It's it's a great value. Gotcha, even with that rally still at that 10 times. Um, and when you look at the margins, and talking about a a regional bank, some of them are really indexed to loans or really index to the consumer. But you say this one has diversified revenues. So what does that picture look like? Well they're also in wealth management and other sources. And their loans are very diversified. Their loan book is much diversified. So some banks are over concentrated in real estate or commercial or whatnot. They're extremely diversified. And that's key for banks, because they're leveraged institutions and everything's about credit. This bank's got a great credit underwriting group and yet they have above margins, well above margins for their peers and uh this diversified revenue makes them a safe choice in banking which is key because they are cyclical. Gotcha. Alright. And then finally, defensive positioning here within the assets that they hold. So what does defensive mean in this case? Okay, so I just talked about it being defensive on its credit underwriting, balance sheet structure. Yes. They have a way above average amount of tangible equity capital, above 9%. JP Morgan for example, runs maybe 7 and a half percent. So this is a very safe bank, yet it's growing. So think about when things get ugly, let's assume that there's a recession, other banks have to pull back back, this bank can not only expand, but can define credit terms in the market. That makes it a really good all weather stock, up and down markets. And just curious, it's not on our three points here but where is that growth coming from for the bank? Is it in loans, is it in wealth management? Is it all of the above? It's it's all of the above. They got great 8% loan growth year over year so it's consistent and not exorbitant, but the markets they're in, it's not just a St. Louis bank, it's in Texas, it's in other markets in the south. And so it's it's growing actively in those markets and in good markets that have growth. Gotcha. So even for these picks, we like to say what what could maybe go wrong or what's the risk? You say an industry cyclical trading out of favor. So what does that mean? The biggest, the biggest risk to this stock is not the company itself, it's the sector, it's banks. So the stock could go down. I think you just weather it or you buy more. Gotcha. Alright. Now let's get to the stock you don't like as much and that is Wingstop. Good thing we're past the thick of uh football season although I guess wings are an all year round item here. Now, this stock is down about 14% over the past 12 months, but it has bounced a little bit uh year to date to some extent, just with this latest move upward here. Um, but contrary to your other pick, you say this one is is too rich for your blood. It's almost just the opposite of Enterprise Financial. This is a wonderful company and a wonderful management team, doing a great job, so I'm not stepping on the company. It's the valuation. The valuations at 65 PE at an 18% growth. When we just talked about a company at 10 forward PE at 15 to 16% growth. I think that's too much. And you don't see that in restaurants and they and they've talked about, you know, a slowing growth rate, slowing metrics. So this this metric is just way too high for what it is. Nothing against the company, it's just the stock. Gotcha. Okay, and but let's talk about that growth piece of it that you just mentioned here. Um, you know, in a time when the consumer sentiment surveys are not looking so great. So what's the growth profile here? If anything goes wrong, this stock is in trouble. It is a prima donna stock. Everything's assumed to go correct. Well, last year had terrific growth, it's done terrific. It's got efficiencies, they're very AI driven, their kitchens are super efficient, but there's there's not a lot of room for same store same store sales growth, which they even forecast to be way low this year, compared to what they've had in the past, yet the stock hasn't priced that in. Gotcha. And then finally, overbought signals. Now, as I mentioned the stocks down over the past year, but it's had a pop year to date. So is that pushed it into overbought? It's just sort of a technical. Really it came up over 54% in the last 30 days. Sell it, take your profits, go somewhere else and buy something else and wait for this to come down again. Okay, so when we talk about what could go right, I guess it's waiting for it to come down again. If it comes down, how far would it have to come down, what other signals would you be looking for to maybe step back in? You know, I would like to see it ought to be at least a 20 to 30 forward PE. Even because they plan on opening plenty of more stores. That same store sales growth is going to be tough. They could get it in the new stores, right? So if they can keep that pace going, then they're going to keep a higher than average PE, but it shouldn't be 65. So it maybe gets in the 30 to 40 range or something, I'm all over this stock. Gotcha. All right. Dory, thanks so much. So and just quickly, do you have a position in Enterprise? You hold Enterprise? Uh, definitely hold Enterprise. We're bank investors and I don't have one in Wingstop, but I did eat some dry rub wings last night. Alright. That's the best disclosure we have ever gotten, Dory. And Dory is going to stick around and join us a little bit later for broader market chat as well. Thanks so much for watching. Goodbye or Good Buy. We'll bring you new episodes at 3:30 PM Eastern. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
