7 hot FTSE-listed stocks from defence and aerospace space

Summary

  • Defence stocks can be a secure investment option because the industry always remains in action with persisting geo-political tensions.
  • Rolls Royce, BAE Systems, and Chemring Group, among others, are some of the biggest stocks in this sector.

Investing in defence stocks can be considered a secure investment option. Geo-political tension among nations will last as long as the earth survives. If there is conflict, these industries would never go out of business. It can be safely assumed that the defence production would continue whatever may be the situation. Every nation wants and looks for securing their boundaries, and for that, they need the latest and modern defence procurement. This sector could be an interesting option to explore for defensive investors.

Here are 7 stocks from the defence sector with the largest market capitalisation:

  1. BAE Systems Plc (LON:BA.)

The shares of this British aerospace and arms security company have a one-year return of 12.49 per cent to its investors. The market capitalistaion of the stock stood at £17,206.66 million, while it has a price-to-earnings ratio of 13.17x and a dividend yield of 4.45 per cent.

For the full year of 2020, the company’s sales increased 4 per cent to £20.9 billion from £20.1 billion a year ago. Underlying EBITDA increased 1 per cent to £2,132 million from £2,117 million a year ago. The company’s revenue increased to £19.3 billion from £18.3 billion, while the dividend per share increased to 23.7p from 9.4p last year.

  1. Rolls Royce Holdings (LON: RR.)

The shares of this multinational defence company have given a one-year return of 2.30 per cent and hold a market capitalisation of £8,427.84 million.

The company’s revenue fell to £11,824 million in 2020 from £16,587 million a year ago. Its loss for the year increased to £3,169 million from £1,311 million a year ago. At the end of the year, the company had liquidity of £9.0 billion, including £3.5 billion cash and £5.5 billion in undrawn credit facilities.

  1. Meggit Plc (LON: MGGT)

The shares of this global component maker for aerospace have a one-year return of 41.93 per cent, and its market capitalisation stands at £3,391.06 million.

For the first quarter of 2021, the company expects its group revenue to improve sequentially and would be 29 per cent down on an organic basis, compared to being down 31 per cent in the last quarter of 2020.

Its defence and energy segment are expected to remain robust. The COVID-19 pandemic would impact the profit performance in the first quarter. Better working capital is expected to enhance the cash performance of the company.

  1. Qinetiq Group Plc (LON: QQ.)

The shares of the defence technology a market capitalisation £2,007.13 million and a one-year-return of 20.46 per cent. The company has a price-to-earnings ratio of 16.03x and a dividend yield of 1.99 per cent.

For the year ended 31 March 2021, the company’s revenue was up 19 per cent to £1,278.2 million from £1,072.9 million a year ago. Underlying profit after tax of the company was up 14 per cent to £126.1 million from £113.7 million a year ago.

  1. Ultra Electronics Holdings (LON: ULE)

The shares of the critical detection and control markets specialist company have given a one-year-return of 17.91 per cent. The company’s price-to-earnings ratio stands at 20.02x, and its dividend yield was 2.42 per cent. The market capitalisation of the shares is £1,678.29 million.

For the first half ended 2 July 2021, the company’s underlying trading has been robust and above the expectations. It achieved a good order intake, and for the full year, orders are expected to be more than what it was in 2020, primarily because of strong performance by maritime, forensic technology, and intelligence & communications.

  1. Avon Rubber Plc (LON: AVON)

The shares of defence related engineering manufacturers of respiratory protection equipment company, have a dividend yield of 1.06 per cent and a market capitalisation of £793.58 million.

For the first half of 2021, the company’s orders received increased 46.5 per cent to $167.9 million from $114.6m in the same period a year ago. Adjusted profit before tax increased 23.1 per cent to $16 million from $13 million. Basic earnings per share increased to 9.8 cents from 5.9 cents in the same period a year ago.

  1. Chemring Group Plc (LON: CHG)

The shares of this global company engaged in advanced technology products for aerospace have given a one-year return of 19.76 per cent. The shares have a market capitalisation of £843.09.  The stock has a price-to-earnings ratio of 21.58x with a dividend yield of 1.41 per cent.

For the six months ended 30 April, its revenue increased 8 per cent to £206.3 million from £191 million in the same period a year ago. Underlying EBDITA increased 12 per cent to 39.5 million from 35.2 million in the same period a year ago. Interim dividend per share increased 23 per cent to 1.6 pence from 1.3 pence earlier.

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