Here's Why Aerospace Is Still a Must-Buy Sector in 2022
With bell weather indicator, the S&P 500, down nearly 25% this year, it hasn't been easy to find industries that have bucked the market's trend and have performed well in the stock market. However, commercial aerospace has been a bright spot. Shares of advanced-composites manufacturer Hexcel (NYSE: HXL), for example, are in positive territory. In addition, shares of aerospace and defense giant Raytheon Technologies (NYSE: RTX) have remained relatively flat this year. The good news is, based on what Delta Air Lines (NYSE: DAL) management recently said, there's every indication the commercial aerospace industry's outperformance can continue. Here's why.
In a nutshell, it's airline profitability. Airlines will run more routes if they are profitable, which means more revenue for services and aftermarket parts companies (Raytheon) as flight departures pick up. Moreover, if airlines feel confident in their financial future, they will order more airplanes, meaning more future revenue for aircraft manufacturers and suppliers like Hexcel and Raytheon.
Simply put, airlines like Delta need to grow earnings and cash flow. Otherwise, all companies lower down the industry vertical will face challenges. Fortunately, Delta's recent third-quarter earnings presentation contained everything you would want to hear if you invest in the aerospace sector.
Source Fool.com
