All eyes have been on Afghanistan after United States President Joe Biden moved forward with the planned withdrawal that was negotiated back in 2020. Intense debate over its merit and execution has followed. This aside, investors can safely bet on the expansion of U.S. defence spending in the years ahead.
Raytheon Technologies (NYSE:RTX) is one of the top stocks to target in this environment. The merger of Raytheon and United Technologies created an aerospace and defence contracting giant. Its shares have climbed 23% in 2021 as of close on August 30. The stock is up 39% in the year-over-year period. However, the stock had dropped 2% month over month. Now is a great time to buy the dip.
The company released its second quarter 2021 results on July 27. Raytheon’s earnings were powered by growth in its defence businesses. Sales climbed 13% from the prior year to $15.8 billion. Meanwhile, net income soared 168% on an adjusted basis to $1.56 billion. Adjusted diluted earnings per share climbed 164% to $1.03. Moreover, operating cash flow from continuing operations surged 531% to $1.32 billion.
These results spurred Raytheon to bolster its outlook for the full year 2021. It now anticipates higher sales, adjusted EPS, and free cash flow for the year. The company backlog rose to $151.8 billion by the end of the quarter. Its defence backlog rose to $66.1 billion.
Shares of Raytheon last had a price-to-earnings ratio of 58. That puts the aerospace and defence giant in favourable value territory relative to its industry peers. Moreover, it offers a 2.4% dividend yield.
