Raytheon Hits 52-Week High On Foreign Sales, Solid Backlog

Shares of Raytheon Company (NYSE:RTN) scaled a new 52-week high of $138.67 during Friday’s trading session, before closing a tad lower at $138.49. With a market cap of around $41.13 billion, the company has seen its shares gain roughly 44.6% in the past one year.

Over the past 52 weeks, Raytheon’s shares have ranged from a low of $96.68 on Aug 24, 2015 to a high of $138.67 on Jul 8, 2016. The average volume of shares traded over the last three months is approximately 1.9 million.

What’s Driving Raytheon?

Raytheon is one of the best-positioned large-cap defense players and it has been investing heavily in technological upgrades. The company has also been focused on acquiring surveillance and cyber security companies in order to boost its intelligence business and leverage the commercial prospects of cyber. With the U.S. fiscal 2016 bill emphasizing cyber programs, cyber-oriented work is expected to yield solid growth in the coming years.

RAYTHEON CO Price

In the past few years, the company has invested over $3.5 billion to expand its cyber security capabilities. It aims to provide best-in-class security solutions to the U.S. Department of Homeland Security to counter rising cyber threats. Notably, Raytheon enjoys a steady stream of contracts from government establishments.

Raytheon continues to focus on its overseas business as well. Following in the footsteps of the U.S. and its allies, other countries are also working on utilizing advanced technology in their defense systems. Thus, foreign military contracts have become a vital growth driver for Raytheon.

Recently, Raytheon’s Tucson, AZ-based Missile Systems division won a modification contract worth $291.8 million for the procurement of 660 AIM-9X Block II Up Round tactical full rate production Lot 16 Missiles for the U.S. Navy, Air Force and Army, as well as the governments of Japan, Norway and Taiwan.

In this context, we remind investors that International bookings comprised 26.7% of total first-quarter bookings. International sales surged 17.1% and represented 42% of its total backlog during the quarter.

In particular, rising demand from the Gulf countries and the Asia-Pacific is turning out to be a key revenue driver for the company. Again, new avenues for growth in Asia and Europe continue to emerge.

Raytheon’s bookings in the first quarter were $6.2 billion, compared with $4.5 billion in the year-ago period, reflecting a year-over-year increase of 38.7%. The company remains optimistic about its performance in 2016 backed by its robust backlog of $34.77 billion in the first quarter.

Raytheon currently carries a Zacks Rank #2 (Buy).

Other Key Picks in the Sector

Other favorably placed stocks in the same space include TransDigm Group Incorporated (NYSE:TDG) , HEICO Corporation (NYSE:HEI) and Rockwell Collins Inc. (NYSE:COL) . While TransDigm Group sports a Zacks Rank #1 (Strong Buy), both HEICO Corporation and Rockwell Collins have the same rank as Raytheon.