Top Analyst Has 3 Favorite Aerospace and Defense Stocks to Buy for 2018

To say that the election of Donald Trump as president was bullish for the aerospace and defense sector would be a massive understatement. With shares up over 90%, Boeing Co. (NYSE: BA) was the top-performing stock in the venerable Dow Jones Industrial Average. While that kind of massive outperformance is probably not in the cards for 2018, it remains a solid bet that the sector will see additional gains.

One of the keys for this year is going to be stock selection, and in a new research report from SunTrust, while they remain positive overall, caution seems to be one of the important aspects for this year. The report stated why:

We remain somewhat sensitive to valuations while paying close attention to company specific fundamentals, but in total, we anticipate that the A&D sector will again outperform the S&P 500 in 2018. Reduced tax rates should drive upward estimate and price target revisions with the added benefit of fueling shareholder friendly capital deployment initiatives.

The SunTrust analysts have three favorite aerospace and defense ideas for 2018, and all make sense for long-term growth portfolios with a degree of risk tolerance. They noted this when discussing the top picks:

2017 will be a tough act to follow and while a still rising tide may lift all boats, we believe stock selection will be critical to generating alpha over the next 12 months. Out of favor performance and valuation laggards will likely be a common strategy that we largely agree with. Staying....

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