By Al Root

Aerospace stocks have been weak amid geopolitical tensions and higher oil prices. Some have started to rebound. Others, curiously, have lagged.

That's an opportunity for investors. Citi has three stocks to check out.

The S&P 500 might be at or near a record, but aerospace & defense has been left out of the party. After fighting broke out in Iran, the iShares Aerospace & Defense ETF dived more than 13% from its prewar highs. Things have improved somewhat. The ETF is now down just 4% from prior highs.

However, stock performance has been uneven. Heico stock, for instance, is back at new highs, helped by strong first-quarter earnings that sent shares almost 12% higher on May 28.

Heico reported earnings per share of $1.66. Wall Street was looking for $1.33. Earnings grew almost 50% year over year.

Heico primarily supplies parts to the aftermarket, or after a plane has left Boeing and Airbus and is in the hands of an airline. Different aerospace companies have different mixes of aftermarket and so-called OEM business. OEM is short for original equipment manufacturer, and in the case of aerospace, it refers to Boeing and Airbus, the companies that make the planes.

Heico's results showed that the aerospace aftermarket is healthy, says Citi analyst John Godyn. "Yet other commercial aftermarket stocks remain near recent lows."

He advocates buying shares of Loar, RTX, and VSE to get more exposure to the aerospace aftermarket.

Coming into Friday trading, those three stocks are down an average of 14% since the Iran war started. All three posted much better-than-expected quarterly earnings reports. Their stocks didn't all get a Heico-like reaction, though. Loar and RTX fell after earnings. VSE shares jumped 17%. (Its shares were hit harder post-war than most other aerospace stocks.)

Godyn rates all three shares Buy. His price target for VSE stock is $230. His price targets for RTX and Loar are $226 and $71, respectively.

VSE stock was up 5.4% in midday trading at $186.53. Loar shares are down 0.1% at $65.15. RTX stock was up 0.2% at $179.22, while the S&P 500 and Dow Jones Industrial Average were up 0.3% and 0.8%, respectively.

The three shares are popular with Godyn's peers. Overall, 74% of analysts covering RTX rate its shares Buy. The average Buy-rating ratio for stocks in the S&P 500 typically ranges from 55% to 60%. The Buy rating ratios for Loar and VSE are both 100%.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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May 29, 2026 12:25 ET (16:25 GMT)

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