CNBC’s Jim Cramer said on Wednesday he believes Wall Street is not closely monitoring RTX, an aerospace and defense firm.
Raythorn Technologies’ rebranded version, RTX, now has a strong aerospace division as a result of a merger with United Technologies. Despite experiencing a decline of over 2% this week, primarily attributed to a strike affecting a separate aerospace company, RTX remains a compelling contender according to Cramer. He believes that RTX is well-positioned in two lucrative sectors expected to generate substantial profits in the forthcoming years.
“I think you’re getting another chance to buy RTX into unjustified weakness here,” Cramer mentioned. “Because, if anything, I feel much more confident about their long-term prospects in both aerospace and defense — two businesses where they seem set for many, many years of gigantic orders.”
As per Cramer, the usual aerospace bull market cycle lasts almost seven years, and he feels that the need for air travel is only rising, in part because of customer’s post- COVID travel needs. According to CNBC’s Phil LeBeau at the Paris Air Show on Tuesday, RTX CEO Greg Hayes spoke of the booming market for commercial aircraft .
“We’re back to pre-pandemic levels domestically for air traffic, we’re almost back there internationally,” Hayes said. “And we still see four-and-a-half, five percent annual growth at least for the next decade.”
Hayes added that due to the war, RTX is already obtaining multi-billion dollar restock orders.
“We’re going through those munitions at a rate that none of us expected. It will take us years to restock the U.S. and our NATO allies individually,” according to Hayes, stating that RTX has already collected $2 billion worth of orders related to Ukraine, and he anticipates a further $3 billion this year alone. “But there is probably a multiple of that we’ll see over the next three or four years. But it’s not a this year/next year. It literally will be for the next decade.”
The government’s defense budget was not affected by the debt ceiling agreement, despite widespread fears to the contrary. Hayes agreed with Cramer that RTX is “locking in major business for years to come” as the conflict between Ukraine and Russia rages on.