Howmet Aerospace: A Strong Bet in the Aerospace & Defense Revolution
At Extreme Investor Network, we believe that understanding market dynamics and emerging trends is key to successful investing. Today, let’s dive into Howmet Aerospace (HWM), a company that’s not just surviving but thriving amidst the volatility affecting the aerospace and defense industries.
A Comet Rising Through the Clouds
Howmet Aerospace, previously part of Alcoa, has undergone a significant transformation since rebranding in 2020, shifting its focus from oil and gas to the fast-growing aerospace and defense sectors. This pivot has positioned HWM as a formidable player, especially given the ongoing resurgence in air travel and increased defense spending fueled by geopolitical tensions.
While many stocks have struggled to maintain their value during recent market pullbacks, prominent names in the aerospace and defense space like Kratos Defense & Security, Heico, General Dynamics, and even giants like Boeing and General Electric (classified as an industrial conglomerate) have shown resilience. This performance can be attributed to favorable government policies aimed at reshoring manufacturing and the integration of advanced technologies like artificial intelligence in their operations.
A Portfolio Powerhouse
Our team at Extreme Investor Network recognized HWM’s potential early, adding it to our growth portfolio on June 24, 2024, with an initial allocation of 1%. That decision has paid off handsomely, with the stock surging nearly 75% during that time. As we keep a close eye on market movements, we anticipate increasing our allocation by an additional 2% in the next rebalancing, contingent upon confirming the broader market has stabilized.
Technical Insights: Riding the Uptrend
Analyzing the technical aspects, you’ll note an impressive uptrend that has developed since October 2023, characterized by a parallel trend channel. Recently, Howmet Aerospace tested its parallel channel support along with the 20-week moving average, before rebounding ahead of broader market movements. This recovery is not just a fluke; it’s backed by remarkable year-over-year earnings per share (EPS) growth—88%, 65%, and 54%—for the years leading up to 2026.
While 2025 is projected to see a moderation in growth at around 17%, forecasts for 2026 suggest EPS could exceed 20% once more, making HWM an attractive proposition for growth-focused investors.
Balancing Valuation with Potential
Investors may rightfully be concerned about HWM’s current price-to-earnings (P/E) ratio of 48. However, when you weigh this against the anticipated EPS growth and HWM’s strategic positioning in explosive sectors, the forward P/E ratio of 31—based on projected earnings of $4.04 for 2026, with the last trade at $136.32—doesn’t seem inflated.
As we consider increasing our position, our strategy involves utilizing a stop loss around the March lows of $120 to manage our risk effectively. This balanced approach is crucial, especially in volatile markets, allowing us to capitalize on growth opportunities while safeguarding our investments.
Join the Conversation at CNBC Pro LIVE
If you’re looking to deepen your investment acumen and connect with industry experts, don’t miss our upcoming event, CNBC Pro LIVE, at the iconic New York Stock Exchange on June 12. Network with fellow investors and gain insights from renowned analysts like Carter Worth, Dan Niles, and Tom Lee. This unique opportunity offers invaluable information to foster your investment strategies.
Conclusion: Make Informed Investment Decisions
At Extreme Investor Network, we’re committed to providing you with nuanced insights and data-driven analysis to help you navigate the investing landscape. Howmet Aerospace presents a compelling case for investors looking to position themselves in one of the most promising growth markets today. As always, we recommend consulting with your financial advisor to tailor your investment approach to your unique circumstances.
Remember, while the markets can be uncertain, knowledge and strategy can help you achieve your investing goals.
Stay tuned for more insights and updates from Extreme Investor Network!
Disclaimer: The content provided here is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Always consult with your financial advisor before making investment decisions.