2 Aerospace and Defence Stocks to Watch as the Sector Gains Altitude

Investors looking for a long-term play on a recovering industry should definitely consider these two aerospace and defence stocks today!

| More on:
bulb idea thinking

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Aerospace and defence stocks tend to remain under the radar on the TSX which, of course, is ironic considering the use of radar in the field. But I digress.

Aerospace and defence stocks, therefore, become a strong option when you’re investing in defensive stocks during a downturn. These companies remain supported by government programs in many cases, with funding that will remain even during a recession.

With that in mind, let’s look at some aerospace and defence stocks that should continue to climb higher.

Created with Highcharts 11.4.3Cae + Magellan Aerospace PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

CAE

CAE (TSX:CAE) provides critical training for the civil aviation, defence, security and healthcare markets. The company provides training through simulators and “synthetic exercises” to be used before live-training begins. CAE is diversified throughout the world, though most of its sales come from the United States.

During its recent earnings, CAE stock beat out earnings estimates by a small margin, another quarter in which CAE stock beat estimates. Though revenues declined slightly. This led to a drop in shares of 7%, but analysts came out the next day stating it was “overdone.” The simulator company brought in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $291 million, and operating income of $202 million.

CAE stock also reaffirmed earnings per share guidance for 2022 through 2025 of 20% growth. However, investors seemed to be more concerned about near-term results, which could be slower than the expected 20%. Even so, analysts were quick to point out there are “very attractive” long-term trends, as well as favourable performance in the industry as a whole, but especially in the civil sector.

Shares remain down by 14% in the last year, but are up 5% year to date. So now could be a solid time for investors to jump in for a turnaround before the year is out. Then, hold on long-term as the company recovers in the next year through to 2025 and beyond.

Magellan Aerospace

Then, we have Magellan Aerospace (TSX:MAL), another top performer in the aerospace industry. This company focuses on aerostructures and aeroengines. It designs parts that can be applied to new aircrafts, or replacement parts. The company serves both commercial and defence markets, though commercial takes up about three-quarters of sales. Magellan stock sells mainly in Canada, the United States, and Europe.

The company reported a strong first quarter that blew past earnings estimates, according to analysts. In response, several analysts upped their recommendation from a hold to a buy. Further, analysts believe there is now long-term upside as Magellan stock remains undervalued at this point.

As commercial aviation continues to recover from both the pandemic as well as the economic downturn, there’s likely to be a large amount of growth in share price. Supply chains remain limited, but as the company increases production, and Magellan continues to feed the demand for commercial aircrafts, there is bound to be some serious growth through 2025. Furthermore, Magellan stock is primed for growth through acquisitions as well.

Shares are up 5% in the last year, but down 11% year to date. So now could be a great time to get in on these aerospace and defence stocks before there is a major recovery. Meanwhile, you can bring in a nice little 1.26% dividend while you wait.

Should you invest $1,000 in Cae Inc. right now?

Before you buy stock in Cae Inc., consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Cae Inc. wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

The letters AI glowing on a circuit board processor.
Tech Stocks

How I’d Allocate $10,000 to AI Stocks in Today’s Market

Shopify (TSX:SHOP) is one of Canada's most compelling AI stocks.

Read more »

Canada day banner background design of flag
Tech Stocks

The Top Canadian Stock to Buy With $5,000 in 2025

There are few Canadian stocks out there that offer the outlook of this tech stock, bound for more growth.

Read more »

ways to boost income
Tech Stocks

How I’d Invest $11,500 in Canadian Fintech Stocks to Revolutionize My Finances

Propel Holdings stock's recent dip could be a trading opportunity for long-term financial gains. Here's why the fintech stock is…

Read more »

Start line on the highway
Tech Stocks

Where I’d Invest $5,000 in Growth Stocks With Long-Term Potential Through 2030

DO you have $5,000 to invest to grow your wealth over the long term? These growth stocks could deliver strong…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

data center server racks glow with light
Tech Stocks

April Opportunity: Where I’d Invest $7,000 in These 3 Tech Stocks Right Now

These tech stocks have solid growth potential and are trading at discounted valuation, providing a solid buying opportunity in April.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

If I Could Only Buy and Hold a Single U.S. Stock, This Would Be It

You don’t need 40 different stocks to build wealth. A few good ones can boost your portfolio, and this U.S.…

Read more »

cloud computing
Tech Stocks

2 Top Canadian Information Technology Stocks to Buy Right Now

These two Canadian information technology stocks are bargains amid the downturn in the broader market for long-term investors.

Read more »