Defense Stocks To Buy And Watch: Woodward Actionable Now As Stock Trades In Buy Zone

Woodward (WWD) is among the top aerospace stocks to buy and watch. The stock features three quarters of strong year-over-year earnings and sales growth. Shares also are touching off support at a key area.

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Fort Collins, Colo.-based Woodward provides products for both commercial and military applications, as well as industrial market applications. Propulsion system controls for turbine-powered aircraft, actuation systems and motion controls are all areas in which Woodward specializes.

It’s no secret that a recent multitude of unstable geopolitical events have put defense stocks front and center for investors. The Israel-Hamas conflict, tensions in Iran and Russia, and even the U.S.-China chip war over Taiwan, have helped two prominent defense ETFs surge.

SPDR S&P Aerospace & Defense ETF (XAR) and iShares U.S. Aerospace & Defense ETF (ITA) — both of which include Woodward as a component — rose roughly 11% and 9%, respectively, in the month of November.

As far as its industrial market applications, the company has scored partnerships with Airbus (EADSY) and British multinational Rolls-Royce (RYCEY on OTCMKTS).

Woodward’s Airbus, Rolls-Royce Partnerships

For industrial markets, Woodward provides controls for equipment that produces electricity. It’s also involved in controls of power quality, distribution and storage on the electrical grid.

Woodward also provides controls for power equipment used in the extraction, distribution and conversion of renewable and fossil fuels in marine, locomotive and industrial equipment applications. Its subsidiary Woodward L’Orange, a German engineering manufacturing company, has partnered with Rolls-Royce and Germany-based WTZ Rosslau to develop a methanol engine for marine applications.

The new engine will contribute to decarbonization by running on green methanol while producing low-emission, high-speed combustion engines for ships.

Airbus also recently tasked Woodward with providing power for Airbus’ ZeroE demonstrator. The effort involves a zero-emission aircraft that Airbus hopes to press into service by 2035.

Stocks To Buy And Watch: WWD By The Numbers

Woodward has reported three consecutive quarters of year-over-year earnings growth. During its fiscal fourth quarter that ended Sept. 30, the company’s earnings jumped 58% to $1.33 a share. Top-line growth also surged 21% compared with the year-ago quarter.

That followed another impressive round of results in the third quarter, as earnings soared 114% and sales climbed 30%. For the current 2024 fiscal year, Wall Street forecasts 20% earnings and 15% growth in fiscal 2025.

Woodward scored a breakout from a 133.15 flat base buy point in early November. But shortly after the breakout, the stock pulled back to its 50-day moving average, where it gained support. In early December, the stock reentered the buy zone and is now touching off support at the 21-day exponential moving average.

Other technical positives for the stock include an B- Accumulation/Distribution Rating and a growing number of funds that own the stock. The number of funds reached 521 in the most recent quarter, up from 446 in the December, 2022-ended quarter.

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