CA - These defense and aerospace picks took off in 2022

Aerospace and defense stocks on average performed better in 2022 than the broader market, and Seeking Alpha authors picked some of the sector's biggest winners.

The iShares U.S. Aerospace & Defense ETF ( ITA ) gained about 7.8% for the year, ahead of the broader Industrial Select SPDR ETF, which fell 6.5%. And while the SPDR S&P Aerospace & Defense ETF ( XAR ) lost 6.3% for the year, that bested the S&P 500 ( SP500 ), which saw a nearly 20% 2022 decline.

Russia’s invasion of Ukraine in February triggered a rally in the aerospace and defense industry, as the United States and European countries pledged billions of dollars in aid to help repel the attack. Ukraine didn’t surrender to the invading forces, and instead fought to reclaim eastern regions seized by Russia.

However, the rally ran out of gas in March when the Federal Reserve raised interest rates for the first time in more than three years in an effort to quell inflation. Bond yields soared and investors reset their valuations for the entire stock market.

In the commercial-aviation segment, airlines' demand for new planes rebounded as passenger volumes reached post-pandemic highs in many countries. And as China reopens from lockdowns, demand for business and leisure travel is forecast to get stronger.

Here's a rundown of how some key aerospace and defense names performed:

Amid the sector's 2022 changes, Seeking Alpha contributors picked what turned out to be some of the market segment's outperformers. Here's a look at SA editors' choices for some of the year's best defense-and-aerospace articles:

A Well-Timed Lockheed Endorsement

More than a week before Russia invaded Ukraine on Feb. 24, Seeking Alpha author Leo Nelissen recommended buying stock in Lockheed Martin ( NYSE: LMT ), the biggest U.S. defense contractor.

Nelissen said Lockheed offered a high dividend yield and growth, and the opportunity for gains amid uncertainties about Fed policy .

Since Nelissen’s article was published on Feb. 13, Lockheed has gained about 23%, contrasting with an approximately 20% decline for the S&P 500 ( SP500 ).

Maxxing Out on Maxar

Two months after Russia invaded Ukraine, Seeking Alpha contributor Chetan Woodun argued that satellite imagery company Maxar Technologies ( MAXR ) merited a higher valuation for its role in the defense industry. As a provider of high-resolution photos to the U.S. government, its allies and the media, Maxar ( MAXR ) saw greater demand for its services.

After Woodun’s article was published on April 21, Maxar ( MAXR ) rose about 36%. Its shares then more than doubled on Dec. 16 after private-equity firm Advent International offered to buy Maxar ( MAXR ) for $53 a share in cash, or $6.4 billion including debt.

Boeing's Q4 Ascent

Last summer, Boeing ( BA ) saw a significant turning point as the aircraft maker resumed deliveries of its best-selling 787 Dreamliner dual-aisle jet.

Seeking Alpha contributor Hawkinvest in early October recommended buying Boeing ( BA ) shares, comparing its efforts to overcome manufacturing and safety issues to the rebounds by other companies that worked through significant crises.

Boeing ( BA ) provided an update weeks later on its forecast for free cash flow, and in December signed a record-breaking deal with United Airlines ( UAL ) to provide the carrier with hundreds of new jetliners.

Partly as a result, Boeing gained more than 57% during Q4, although its approximately 8.4% decline for the year has weighed on the performance of aerospace and defense stocks as a group.

A Look Ahead

Going into 2023, SA's Quant rating system has a Strong Buy on iShares U.S. Aerospace & Defense ETF ( ITA ), while our authors are more cautious, with a Hold rating .

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