We all know everyone’s favorite stock Lockheed Martin, but have you heard of our lord and savior Raytheon Technologies (RTX)?
What they do:
The defense sector saw a steep rise at the beginning of the Ukraine invasion, and as one of the largest defense manufacturers (drones, javelin, etc) we saw RTX rise with them. However I want to highlight some of their other areas of production. In addition to defense systems, Raytheon they also have a hand in critical weather and earth observation instruments, and developing ground control systems for satellite control (they installed the one in Baltimore for James Webb as well, which is an adapted version of what they use for satellites). The latter is really cool because satellites aside, their software is taking code generated from observations made by the James Webb and generating images that we can see, in addition to being able to maintain the safety and health of the telescope and allowing control of it. They must also out of necessity have a hand in cybersecurity solutions, which they state is a part of the design from the ground up for all of their products (think not only of defense systems, but protecting the data of any satellite).
Why I’m bullish:
Internet, cellular service, climate observation, data collection… its apparent that the satellite industry has large growth potential (especially as we develop smaller satellites like cubesats) in both potential applications and the ability to put more into orbit. If you want uninterrupted satellite internet/phone service, you need thousands of satellites communicating with each other and communicating with ground stations. Raytheon has an entire business dedicating to launching satellites, building the communication systems for them, and developing sensors to steer the satellites if needed and to determine where they are (as the latter requires a fuel, they are also researching solar means of steering control and ways to refuel the satellite in orbit which has applications outside of satellites). Other things that need satellite communication such as gps navigation and timing and global climate monitoring require these same systems to manage that data. All of these things which need to be protected as well. The opportunities here are vast.
Price action:
The caveat to entering any play here is the macro environment of the market. We are currently sitting at pre-Ukraine ramp up price of ~$85/shr. As you can see from the recent price action in September, RTX traded in a channel between $90 and $95 until the recent SPY dump which brought it down to its current level. If this trend continues and pushes us below this support at $85, I’m eyeing $80 as the next support (which could lend itself to a short put (in time length lol Swole) position). As a large part of the commercial aerospace industry, anything in this sector could also potentially affect RTX’s price which is something to keep in mind. The current average PT for RTX is 110-112, which is 31% upside. Once we get some indication of a market reversal (or another bear rally) however I plan to look into longer dated calls around this price target and potential share accumulation.
Making this DD better:
I started this mostly to get conversation flowing about the ticker, so we could use:
- a look at the companies financials (we can see on Sept 13th we had a large drop which could have been partially due to expected cash flow in 2022 being reduced from $6bil to $4bil, however SPY also dropped this day)
- input from anyone in commercial aerospace, aerospace engineering, anything and everything satellites regarding Raytheon’s role/potential and general info on the future of satellites
- new details from Ukraine/Russia as they come out that may affect Raytheon (we of course can’t ignore their biggest role)
Tank you for coming to my DD uwu 