Amid ongoing manufacturing troubles at Boeing, Artisan Partners’ Chris Smith believes that GE Aerospace is poised for success. Smith points out that GE has essentially established a monopoly with its new leap engine, which is set to be featured in all new narrow-body planes. This engine could potentially power more than 80% of aircraft in the skies over the next decade, making GE a dominant player in the aerospace industry.
Following the delivery delays triggered by Boeing’s 737 Max 9 door-plug blowout in January, airlines are now facing the challenge of maintaining older aircraft. This predicament has led to a surge in demand for GE’s products as airlines strive to keep their fleets operational. Smith sees this as a boon for GE and highlights the company as a top industrial stock.
In 2024, aerospace and defense stocks have been on a winning streak, consistently reaching new highs amidst growing global geopolitical tensions. The iShares U.S. Aerospace & Defense ETF (ITA) has surged by nearly 16% this year, reflecting the overall strength of the sector. GE shares have soared by 70%, while TransDigm has seen a 35% increase. In contrast, Boeing has struggled, with shares plummeting by 34% due to heightened scrutiny and disappointing financial results.
Smith also views GE as a beneficiary of the resurgence in U.S. manufacturing, which has seen a shift towards domestic production after years of heavy reliance on outsourcing. With a renewed focus on local manufacturing and supply chains, GE is well-positioned to capitalize on the trend. As manufacturing construction accelerates and companies bring production closer to home, GE stands to benefit from this shift in the industry.
While Boeing faces challenges and scrutiny in the wake of recent incidents, GE Aerospace appears to be in a strong position to thrive. With its innovative leap engine technology and increasing demand for its products, GE has solidified its status as a key player in the aerospace industry. As the market continues to evolve and geopolitical tensions persist, GE’s competitive position and strategic investments in manufacturing bode well for its future success.