The abrupt departure of L3Harris's chief executive officer has landed the defense company's shares in the discount bin. But the company will be indispensable to rebuilding the stock of U.S. missiles, making the decline a rare buying opportunity.

Christopher Kubasik was pushed out last week after a probe into allegations of inappropriate conduct with a subordinate. Under Kubasik, L3Harris had won some eye-catching government deals, including a $400 million overhaul of a Qatar-donated jet for President Trump and a $1 billion investment from the Pentagon into its missile segment.

L3Harris shares are down roughly 11% this year, underperforming a basket of its big U.S. defense prime peers by more than 20 percentage points. Its shares now trade at less than 16 times forward free cash flow, by far the cheapest in and a third lower than the basket of defense primes.

Even before the Kubasik news, other shadows were hanging over L3Harris shares. The company recently postponed a planned spinoff of its prized missile business that makes solid rocket motors-a key component of interceptors-to at least mid-2027, citing unfavorable market conditions. Smaller military-tech stocks haven't fared well this year, a bad sign for a market debut. But the spinoff was supposed to be a catalyst that would unlock value within L3Harris, so the postponement wasn't well received by investors.

Second, investors' general concerns about the defense sector weighed more heavily on L3Harris, which, unlike Boeing, RTX and General Dynamics, has minimal nondefense revenue. As the Iran war progresses, investors are growing more concerned about the possibility of a Congress under Democratic control that could make it more difficult for the Trump administration to push through astronomical Pentagon budgets.

The company's fundamentals still look solid, though. For one, L3Harris is, alongside Northrop Grumman, one of only two companies that make solid rocket motors at scale. These are a key component of missile interceptors such as the Patriot and Thaad missiles that the U.S. has significantly depleted over the course of the Iran war. Combined, the two companies make as many solid rocket motors in one day as what all the smaller manufacturers make in one year, according to Sheila Kahyaoglu, equity analyst at Jefferies.

Solid rocket motors are the "most critical thing that we're most short of in the defense industry," said Tony Bancroft, who manages the Gabelli Commercial Aerospace & Defense ETF, which holds L3Harris. Manufacturing the component is a complex process and involves handling hazardous materials such as propellants. New entrants haven't proved that they can transition from prototypes or limited production, according to a June report from the Center for Strategic & International Studies.

The U.S. has used about half of its prewar stock of interceptors, according to an estimate from CSIS. L3Harris has signed framework agreements with the Defense Department to quadruple the production of propulsion components for Thaad and nearly triple the manufacturing of motors and products for the Patriot PAC-3 missile over seven years.

The company also has a highly profitable communication segment, with operating margins of 25%. The division makes tactical radios, data links and electronic warfare systems, the latter of which has become especially relevant in today's drone-heavy conflicts. L3Harris provides waveforms and radios that can help circumvent the type of electronic jamming that Russia has been using to disrupt Ukrainian drones. It also makes a low-cost weapons system-called Vampire-that can target drones. The segment has been seeing high demand from Europe.

In all, L3Harris expects its top line to grow to $27 billion in 2028, representing an organic compound annual growth rate of 8%, a target that Wall Street analysts expect the company to exceed. That is a faster rate of growth than larger defense primes, most of which are expected to post compound annual growth rates in the 5% to 7% range, according to Visible Alpha.

Lastly, the leadership transition might not be as disruptive as the market thinks. Sam Mehta, the new CEO, was the heir apparent before his former boss's sudden exit, said Bancroft, who notes the succession was merely pulled forward.

L3Harris shares might be stuck in some kind of limbo until the company provides a clear line of sight on its missile-business spinoff. It is hard to predict when that will happen, but spinoff or not, L3Harris has a precious moat in a product that is desperately needed, with a growth rate that likely exceeds peers'. That is worth paying for, especially at a discount.