Core Insights - Investors in Howmet Aerospace Inc. (HWM) should monitor stock movements due to significant implied volatility in the options market, particularly the Jan 16, 2026 $75 Put option [1] Company Analysis - Howmet Aerospace currently holds a Zacks Rank 3 (Hold) in the Aerospace – Defense industry, which is positioned in the top 35% of the Zacks Industry Rank [3] - Over the past 30 days, one analyst has raised the earnings estimate for the current quarter, while three analysts have lowered their estimates, resulting in a decrease of the Zacks Consensus Estimate from 97 cents per share to 96 cents [3] Options Market Insights - The high implied volatility surrounding Howmet Aerospace shares suggests that options traders anticipate a significant price movement, indicating potential trading opportunities [4] - Seasoned options traders often seek high implied volatility options to sell premium, aiming to benefit from the decay of options value if the underlying stock does not move as much as expected [4]

Group 1 - Renewed great-power competition and ongoing conflicts have significantly increased defense budgets and investor interest, benefiting aerospace and defense contractors [1] - Large U.S. defense companies have outperformed the broader market due to long-term defense programs funded through multi-year appropriations and a focus on domestic supply chains [2] - Earnings reports indicate expanded backlogs and upgraded guidance for 2025, driven by strong demand for missiles and space technologies, highlighting a mix of steady cash flows and project execution risks [3] Group 2 - Major stocks in the aerospace-defense industry, such as RTX Corporation, General Dynamics Corporation, and Northrop Grumman Corporation, have seen significant year-to-date gains of 54%, 32.3%, and 23.6% respectively [4] - Strong demand for missile systems, air-defense platforms, and space technologies has bolstered RTX's backlog, while GD benefits from robust shipbuilding orders and steady military vehicle demand [5] - The sector's winners have demonstrated reliable execution and improved supply-chain stability, which are crucial for sustaining gains into 2026 [6][7]

Industry Overview - The Aerospace & Defense industry is experiencing a significant uptrend, with the S&P Aerospace & Defense Select Industry Index increasing by 43.23% year to date, outperforming the S&P 500's gain of 13.90% in the same period [1]. Demand Drivers - Ongoing conflicts in the Middle East and the prolonged Russia-Ukraine war have led to increased demand for missiles and fighter jets, boosting sales for defense contractors [2]. Supply Chain Challenges - Persistent supply chain disruptions, exacerbated by the Trump administration's trade policies, have negatively impacted production efficiency and delayed backlog execution across the industry [2]. Company Earnings Highlights Northrop Grumman - Northrop Grumman reported third-quarter 2025 earnings of $7.67 per share, exceeding the Zacks Consensus Estimate of $6.49 by 18.2%. Total sales were $10.42 billion, missing the estimate of $10.72 billion by 2.8%, but up 4.3% from $10 billion in the same quarter last year [4][6]. - The company is expected to participate in bids for the U.S. administration's $175 billion Golden Dome missile defense system, which could support long-term revenue growth [5]. - Northrop Grumman's total backlog increased to $91.45 billion at the end of Q3 2025, up from $89.74 billion at the end of Q2 2025 [6]. RTX Corporation - RTX Corporation reported third-quarter 2025 adjusted EPS of $1.70, beating the Zacks Consensus Estimate of $1.42 by 19.7%, and improving 17.2% from $1.45 in the same quarter last year [7]. - Third-quarter sales reached $22.48 billion, surpassing the estimate of $21.48 billion by 4.6% and increasing 11.9% from $20.09 billion in Q3 2024 [8]. - RTX's backlog for Q1 2025 was reported at $217 billion [8]. Lockheed Martin - Lockheed Martin reported third-quarter 2025 adjusted earnings of $6.95 per share, exceeding the Zacks Consensus Estimate of $6.33 by 9.8%, and up 2.2% from $6.80 in the previous year [10]. - Net sales were $18.61 billion, beating the estimate of $18.56 billion by 0.3% and increasing 8.8% from $17.10 billion in the year-ago quarter [11]. - Lockheed Martin's backlog as of September 28, 2025, was $179.07 billion, up from $176.04 billion at the end of 2024 [12]. Investment Opportunities - The aerospace and defense industry maintains an optimistic outlook, with rising military spending expected to continue due to the current geopolitical climate [13]. - Investors may consider various Aerospace – Defense ETFs, including iShares U.S. Aerospace & Defense ETF (ITA), Invesco Aerospace & Defense ETF (PPA), SPDR S&P Aerospace & Defense ETF (XAR), Global X Defense Tech ETF (SHLD), and U.S. Global Technology and Aerospace & Defense ETF (WAR) [14]. - XAR is noted as the cheapest option for annual fees at 0.35%, making it suitable for long-term investing [14]. - SHLD is highlighted as the most liquid option with a one-month average trading volume of about 1.38 million shares, ideal for active trading strategies [15].

Company Overview - RTX Corporation, formerly Raytheon Technologies, specializes in avionics, mission systems, and advanced defense technologies, including aircraft engines, air and missile defense, smart weapons, sensors, and cybersecurity tools [9] - The company has seen its stock reach all-time highs, outperforming the market with a year-to-date increase of over 28% [8] Financial Performance - RTX has a strong track record of exceeding earnings estimates, with a trailing four-quarter average earnings beat of 9.9% [11] - Analysts project a 4.2% increase in earnings for RTX in 2025, with expected revenues of $84.1 billion [11] - The company has a substantial backlog of $92 billion as of Q1, indicating solid revenue growth prospects for its defense business [12] Industry Context - RTX is part of the Zacks Aerospace – Defense industry group, which ranks in the top 28% out of approximately 250 industry groups, suggesting a favorable environment for defense stocks [10] - Defense stocks, such as RTX, are viewed as a means to mitigate volatility associated with geopolitical conflicts [16]