RTX: Buy, Sell, or Hold?
(NYSE: RTX) is one of the most fascinating investment propositions in the market. On the one hand, its end markets are in fine shape, and its valuation (based on its medium-term target) looks favorable. On the other hand, there's no shortage of risk, as hundreds of its Pratt Whitney geared turbofan (GTF) engines will need to be removed and inspected over the next couple of years. Here are the bull and bear cases for the stock.
There are five interconnected arguments supporting the bull case. First, RTX remains positioned in excellent end markets. The commercial aerospace market continues to recover as airline capacity builds due to consumers catching up on lost travel plans and business travelers returning. Meanwhile, the emphasis on global defense spending is increasing due to ongoing geopolitical tensions and the need to replenish equipment used by Ukraine.
Second, RTX's margins (notably in defense) have previously been under pressure due to supply chain problems and labor availability. As these problems lessen, there's an opportunity for RTX to expand profit margins.
Source Fool.com
