The heightened need for advanced defense systems owing to rising geopolitical tensions and proposed defense funding in its 2022 fiscal budget, should enable the aerospace and defense industry to grow substantially. Rising government contracts should benefit prominent players in this space — Raytheon (NYSE:RTN) (RTX) and Boeing (BA). But which of these stocks is a better buy now? Read more to find out.Raytheon Technologies Corporation (NYSE:RTX) and The Boeing Company (NYSE:BA) are two well-established companies in the aerospace and defense industry. RTX provides advanced systems and services for commercial, military, and government customers worldwide. It operates through four segments — Collins Aerospace Systems; Pratt & Whitney; Raytheon Intelligence & Space; and Raytheon Missiles & Defense. On the other hand, BA designs, manufactures, and sells commercial jetliners, military aircraft, satellites, missile defense systems, human space flight, and launch systems and services worldwide. The company operates through four segments — Commercial Airplanes (BCA); Defense, Space & Security (BDS); Global Services (BGS); and Boeing Capital (BCC).
The increasing hopes on the passage of the National Defense Authorization Act (NDAA) for the fiscal year 2022 for funding $768 billion for military and national security programs and growing threats from China, Russia, and Iran have helped prominent companies operating in the aerospace and defense industry gain government contracts and investor attention lately. Moreover, massive efforts and funding to combat new generation hypervelocity missiles and deliver improved performance and safety are expected to benefit these companies substantially.
Investor optimism in this space is evident in the Fidelity Select Defense & Aerospace Portfolio’s (FSDAX) 8% gain over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 0.7% return. The U.S. aerospace and defense market is expected to grow at 2.4% CAGR to reach $550.78 billion by 2030. So, both RTX and BA should benefit.