GE Aerospace seems to be in a position to outshine its competitors amidst the ongoing manufacturing troubles plaguing Boeing. According to Artisan Partners’ Chris Smith, GE has effectively established a monopoly with their new Leap engine. This engine is set to be installed in all new narrow-body planes, potentially capturing more than 80% of engines in the skies over the next decade. Smith, the portfolio manager of the Antero Peak Group at Artisan Partners, believes that delivery delays stemming from Boeing’s 737 Max 9 door-plug blowout earlier in the year have led airlines to resort to servicing older aircraft. This, in turn, is creating a surge in demand for GE’s products.
TransDigm: Another Beneficiary
While GE Aerospace seems poised for success, Smith also highlighted aircraft components producer TransDigm as another company likely to benefit from the current market conditions. The aerospace and defense sector as a whole has been thriving in 2024, consistently reaching new highs amidst escalating global geopolitical tensions. The iShares U.S. Aerospace & Defense ETF has experienced a nearly 16% increase this year. GE shares have surged by 70% in 2024, with TransDigm following closely behind at a 35% increase. On the other hand, Boeing has faced a tumultuous year, with its shares plummeting by 34% as a result of heightened scrutiny following the earlier incident.
GE’s Position in U.S. Manufacturing
Smith sees GE as a premier industrial stock and a beneficiary of the recent reinvestments in U.S. manufacturing. After years of heavily outsourced production, the tide seems to be turning as manufacturing construction picks up pace. Smith notes that the trend of de-globalization and companies bringing supply chains closer to home is facilitating this acceleration in manufacturing activity. In light of these developments, GE stands to benefit significantly from the shift towards domestic manufacturing.
While Boeing grapples with manufacturing setbacks, GE Aerospace appears to be capitalizing on the situation through its innovative Leap engine and strategic positioning in the aerospace industry. As global tensions rise and U.S. manufacturing sees a resurgence, GE’s outlook seems promising in the face of continued challenges within the aviation sector.