This week, investors are primarily focusing on second-quarter earnings reports from the financial services sector, but some other sectors soon will step into the earnings confessional, including aerospace and defense.
That group has a few reports this week followed by a deluge of earnings updates from marquee members next, potentially bringing the iShares U.S. Aerospace & Defense ETF (Cboe: ITA), the largest aerospace and defense exchange traded fund (ETF), rival defense funds into focus.
“Some notable companies and dates include: Honeywell (HON) on July 18, United Technologies (UTX) as well as Lockheed Martin (LMT) on July 23, Boeing (BA) on July 24, and Northrop Grumman (NOC) on July 25. Smaller defense companies such as Mercury Systems (MRCY) and Kratos Defense & Security Solutions (KTOS) report numbers the next week,” reports Al Root for Barron’s.
Aerospace and defense stocks are part of the broader industrial sector and have been important drivers of the sector’s performance over the past year. In fact, aerospace and defense names have been industrial leaders.
Inside ITA ETF
ITA, which tracks the Dow Jones U.S. Select Aerospace & Defense Index, holds 39 stocks and is a cap-weighted fund, meaning it is dominated by the largest aerospace and defense stocks. The fund’s largest component is Boeing Co., which is also the largest member of the Dow Jones Industrial Average.
“Two industry issues will be prominent on most calls,” according to Barron’s. “First, investors will look for any insights into Boeing’s troubled 737 MAX program. Many defense contractors also make commercial aerospace parts, making them a good source for investors who are anxious to learn how long the plane will be grounded. Currently, Boeing management expects to submit proposed solutions for the MAX jet to aviation regulators by September.”
Rivals to ITA include the PowerShares Aerospace & Defense Portfolio (NYSEArca: PPA) and the SPDR S&P Aerospace & Defense ETF (NYSEArca: XAR).
Traders looking for a more aggressive play on aerospace equities can consider the Direxion Daily Aerospace & Defense Bull 3X Shares (NYSEARCA: DFEN). DFEN, which debuted earlier this year, seeks to deliver triple the daily returns of the Dow Jones U.S. Select Aerospace & Defense Index.
For more information on the aerospace industry, visit our aerospace & defense category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
