John O'Connell, CFARaytheonRTXBUYJan 20, 2020

Longer-term uptrend remains intact. A lot of defense stocks sold off on the Middle East ceasefire. He's watching closely, as these stocks have been leaders; but if they continue to weaken, it'll be the first warning shot across the bow of a rotation.

If it breaks below the December lows, look to reduce exposure.

Are half-defence, half-aerospace, both strong given wars in Ukraine and the Middle East as governments increase defence spending. Backlogs are at all-time highs. Is a concern that if oil prices remain due from the US-Iran war, then airlines will cut back and this will effect servicing airlines. Will monitor this. 

Outperformed peers last year, up 58%, because they benefited from a hot defence market and hot commercial aerospace one.

Is hybrid defence and commercial aerospace. Has done very well. Trading at a slight premium to historic PE, now 31x. He trimmed it a week ago by 30% due to valuation only. Likes their fundamentals.

66% of revenues comes from commercial aircraft, a growing industry. Airlines need new equipment. Their defence business will benefit from more defence spending in the world.

It is worth looking at since it is involved in defense. In the space he owns Northrop which has a slow and steady dividend and is a growing business. The feeling is that the US will increase spending so it is worth looking at the sector.

Brand-new 52-week high today. Excellent technical structure for the stock. Long-term moving averages are trending higher. One concern is extended valuation. Talk of more defense spending has to come through. Forward PE is near 30x, and earnings growth rate is 10x -- PEG ratio is 3x, a bit expensive.

200-day MA is $154, while the 100-day is ~$167. So you could try to get it around the 100-day MA (which will also be moving higher as the stock moves higher).

They bought it because he liked the combination of the old UTX in the commercial aerospace as well as the defense component. There is a need for more and more defense spending and they have the Patriot missile. On the commercial side, airlines want more fuel efficient airplanes so there is good upside.

Is up 31% the past year. Both their aerospace and defence businesses work because of over $1 billion in US defence spending.

Earnings on Tuesday. There's strong demand for aerospace, and they boast a huge backlog.

Servicing the aerospace OEM side is very profitable, with long-term recurring revenues. This makes the earnings profile less cyclical. Defense side seeing very strong demand from US and internationally. Very strong backlog in defense. Will benefit from global increases in defense spending. In the face of geopolitical turbulence, defense business should stay pretty sound. Yield is 1.96%.

Stock uplift partially due to engine defect costs being on track. Defense segment benefiting from geopolitical tensions and improving Covid-era supply issues. Record backlog. She'd buy here.

Sold last year once more of the value from its initial spinoff was realized. See his Top Picks for recycling the capital proceeds into another opportunity with a similar playbook.

Has a big defense contracting business. But Trump will cut defence spending, and will cut a truce between Russia and Ukraine and calm the Middle East war. Don't be in this space. RTX's valuation is too hight.

Share had dipped because contaminants had gotten into a system, so he put during that momentary weakness. He likes their mix of commercial and defence industries.