The defense and aerospace sectors are soaring right now — particularly stocks like Honeywell and Lockheed Martin.
With heightened tensions in the Middle East, these names have seen a surge in momentum. But even with that strength, I’m not eager to jump in at these elevated levels.
Instead, I’m patiently waiting for the right pullback before committing any capital.
Honeywell (HON): A Value Play Waiting for the Right Entry
HON is a stock that checks a lot of my boxes.
It has a strong dividend, solid earnings growth, and it’s trading well below its estimated fair value. The stock is currently sitting around $202, but I’m not interested in buying at this price. I’m eyeing an entry point closer to the $1175-$180 range, where there’s a solid base of support from 2022.
The fundamentals look good here — price-to-earnings, price-to-sales, and discounted cash flow models show Honeywell is undervalued. But as tempting as it is to jump in, I’d rather wait for the stock to come down to a more attractive level before pulling the trigger.
Lockheed Martin (LMT) and Aerospace & Defense ETF (ITA): Waiting for a Pullback
Lockheed Martin has been an absolute powerhouse, trading near all-time highs.
With geopolitical factors driving defense spending, I’m not surprised it’s been a winner. But I’m not buying at these elevated levels…
I’ll wait for a dip to the $400-$425 range before considering an entry.
For a broader play on the defense sector, I like ITA.
It’s a great way to get exposure to multiple aerospace stocks without committing to just one. Again, though, I’m waiting for a pullback to around $100 to make a move.
Boeing: A Turnaround Story in the Making
Boeing (BA), on the other hand, presents an interesting opportunity.
This stock has been beaten down — it’s still about 65% off its highs. I’ve already started nibbling around $154, and I’ve got a credit spread in place at $125 by $120. If Boeing drops to around $100-$120, I’ll be ready to buy more aggressively.
Boeing is a turnaround play. With demand for aircraft production rising — especially with military contracts — I see potential for a significant rebound.
In this market, patience is key. I’m not rushing to buy defense and aerospace stocks at their highs. I’d rather wait for a solid pullback, which will give me a much better risk-reward setup. Let the market come to you.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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