PPA - PPA: Why It's The Best Aerospace And Defense ETF On The Market

2024-05-02 03:01:34 ET

Summary

• PPA is a top-performing Aerospace & Defense ETF that's outperformed the market by 5% since my August 2023 review. Fees are high at 0.58% but justified, given its superior strategy.
• Compared to peers like XAR and ITA, PPA features better diversification with 51 stocks across 12 sub-industries. I also view its somewhat low allocation to Boeing as a key advantage.
• PPA's valuation is on the high end, trading 3-4 points more than benchmarks like XLI and SPY. However, after adjusting for non-profitable stocks, its more attractive than XAR and ITA.
• 14% estimated earnings per share growth and a 0.96 weighted average five-year beta are two more advantages, and indicate PPA can succeed in bull and bear markets.
• This article reiterates my previous "buy" rating.

Investment Thesis

I last covered the Invesco Aerospace & Defense ETF ( PPA ) on August 21, 2023, and rated it a "buy" based on its superior diversification and profitability qualities over competitors like the SPDR S&P Aerospace & Defense ETF ( XAR ) and the iShares U.S. Aerospace & Defense ETF ( ITA ). Subsequent results were positive, as PPA outperformed both peers and the SPDR S&P 500 ETF ( SPY ) by 5-8%, as shown below....

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