No longer an everything-for-everyone type of enterprise, GE is essentially a pure-play aerospace propulsion and services business. That right there is a massive advantage as the underlying industry has unusually strong long-duration economics. Essentially, GE stock is an investment in a recurring cash-flow machine.

Critically, what keeps the lights on at the company is not just engine sales. Rather, GE is involved in maintenance, repair, overhaul, replacement parts and long-term service agreements. It’s a beautiful arrangement for stakeholders of GE stock. Once an airline buys GE-branded engines, it partially locks itself into the company’s ecosystem for decades. That creates recurring, high-margin aftermarket revenue, leading to impressive financial results.

For example, in last month’s first-quarter disclosure, GE posted earnings per share of $1.86 on revenue of $12.39 billion, easily exceeding analysts’ consensus targets of $1.61 and $10.67 billion, respectively. In the year-ago quarter, EPS landed at $1.49 on revenue of $9.94 billion. These figures aren’t fluky either, with GE stock benefiting from consistent beats on both the top and bottom lines.

Moreover, investors have reasonable expectations that, as the years progress, the bullish case for GE Aero will be even more convincing. Primarily, the company builds engines for the Boeing (NYSE: BA) 737 MAX family and the Airbus (OTCMKTS: EADSY) line. These aircraft represent the most important narrow-body aircraft programs globally, providing tremendous growth potential.

Beyond the expected scale, engine economics should improve favorably for GE stock as fleets age into heavier maintenance cycles. Yes, the security does carry a relatively high premium. Arguably, though, it’s not unjustified given the recurring business trends.

Volatility Skew Signals Some Hesitation Toward GE Stock

With the compelling narratives supporting GE stock, it may seem a bit odd that shares are down roughly 9% on a year-to-date basis. Much of that, of course, is related to the current Iran conflict. With global supply chains at risk, energy prices have been soaring. By logical deduction, that’s not great for the aerospace industry as airlines start scaling back their operations.

However, GE stock does enjoy some mitigating elements to soften the impact of this headwind. From GE’s perspective, the risk comes in the form of flight-hour exposure, since the company’s aftermarket economics depend heavily on planes flying enough hours to catalyze engine wear and maintenance intervals.

Still, the nuance here is that older aircraft may stay in service longer, which forces greater attention on maintenance intensity, overhaul demand and spare parts consumption. Plus, airlines were already having trouble replacing aging fleets, which translates to sustained maintenance business for GE.

If that wasn’t enough, GE does have a defense unit, which facilitates perhaps a cynical benefit amid all the violence. So, GE stock isn’t exactly naked and exposed to a bearish storm — yet the smart money doesn’t seem all that convinced.

If you look at the volatility skew for the July 17 expiration date, you’ll notice that in the options market for GE stock, the net posture is slightly aligned toward downside risk protection. To be clear, the implied volatility (IV) for both calls and puts is relatively flat and linear for strikes near the spot price. Basically, smart money traders don’t anticipate GE shares to rock the boat violently in either direction near the at-the-money (ATM) price.

Instead, the purchasing of insurance is at the tails and predominantly at the left-hand tail. As the strike price zone pivots lower and away from the ATM price, put IV starts rising above call IV. In other words, sophisticated players are willing to pay a premium for extreme downside protection. On the right tail, put IV is also dominant relative to call IV, suggesting a protective posture.

It’s worth pointing out that the smart money isn’t necessarily prescient but rather transactionally sophisticated. Still, with skepticism apparently baked into GE stock, there may be a chance for a contrarian opportunity.

Triangulating a Trade

One of the key tactical advantages of being a GE stock bull is that the security enjoys an upward bias. Using a dataset from January 2019, a random long position held for 10 weeks is likely to generate an exceedance ratio of 61.9%. That means if you were to buy GE simultaneously across a hundred parallel universes, you’d likely be profitable 62 times.

Nominally, the expected forward 10-week distribution would likely place GE stock between $275 and $304. However, the most likely median outcome will probably be somewhere between $285 and $293. Don’t expect to get rich trading GE randomly.

Of course, we’re not interested in rolling the dice for the sake of it. Instead, we’re interested in trading GE stock under specific conditions. In the last 10 weeks, GE printed only three up weeks, leading to an overall downward slope. Under this 3-7-D sequence, the overall exceedance ratio doesn’t really change much.

Still, an interesting point is that the forward distribution benefits from a net positive push in the right direction. Over the next 10 weeks, we would expect GE stock to land between $270 and $320. A major wrinkle is that on July 16, the company will release its Q2 report.

If you’re feeling extra bullish, I’d look into the 300/310 bull call spread expiring July 17. Yes, GE stock would need to rise through the $310 strike at expiration for the trade to be fully profitable. However, this strike falls within the expected 10-week distribution under 3-7-D conditions. Also, a positive earnings report could provide an extra boost.

Should the stars align, you’re looking at a maximum payout of roughly 167%. If you have some spare change for an options wager, GE stock is arguably worth consideration.

That’s because the numbers tell a very different story. The global drone market is projected to surge from about $8.8 billion today to more than $82.5 billion by 2032. That kind of expansion is already lifting drone stocks and ETFs tied to aerospace, defense, and autonomous technology.

And the real story may just be getting started.

One of the biggest catalysts is the push to move away from Chinese-made drones.

For years, Chinese manufacturers have dominated the global drone market, with estimates putting their market share somewhere between 70% and 90%. But that dominance is now being challenged.

The U.S. defense industry, state and local law enforcement agencies, and even commercial businesses are increasingly moving to ban Chinese-made drones and drone components because of national security concerns.

That shift could create a massive opportunity for U.S.-based drone and defense companies. That’s because demand for drones is exploding across multiple industries.

The U.S. military is using drones for surveillance, reconnaissance, and battlefield support. Farmers are using them for crop monitoring and spraying. Logistics companies are testing drones for delivery and warehousing. Oil and gas companies are using them for inspection.

Mining, construction, emergency management, and renewable energy companies are also finding new use cases. In other words, drones are no longer just a niche technology.

They are quickly becoming essential tools across some of the world’s biggest industries.

This powerful combination of geopolitical shifts, rising defense budgets, and expanding commercial use cases is accelerating demand. As restrictions on Chinese-made drones increase and industries across the economy adopt drone technology, investors may be looking at drone stocks and ETFs that could deliver outsized returns over time.

Top Drone Stocks to Watch Right Now

For investors who prefer individual names, several drone-focused companies are worth watching.

• AeroVironment (NASDAQ: AVAV) remains a leader in military drone systems.
• Draganfly (NASDAQ: DPRO) offers exposure to commercial and public safety drone solutions.
• L3Harris Technologies (NYSE: LHX) provides broader defense exposure with meaningful drone integration.

These companies are directly tied to the growth of drone technology and could benefit as adoption accelerates.

While investors can always look at individual drone stocks, there are also exchange-traded funds that offer exposure to the broader theme.

iShares U.S. Aerospace & Defense ETF (ITA)

One way to play the drone boom is through the iShares U.S. Aerospace & Defense ETF (BATS: ITA). The ETF invests in U.S. aerospace and defense companies, including businesses that manufacture commercial aircraft, military aircraft, and defense-related equipment.

Some of its top holdings also have exposure to drone and defense technology.

For example, GE Aerospace (NYSE: GE) is currently the fund’s largest holding, with a weighting of about 21.04%. RTX Corp. (NYSE: RTX) is another major holding, with a weighting of about 14.42%.

As defense spending remains elevated and drone demand continues to grow, ITA could benefit from broader strength in the aerospace and defense sector.

ARK Autonomous Technology & Robotics ETF (ARKQ)

Another ETF to watch is the ARK Autonomous Technology & Robotics ETF (BATS: ARKQ).

This Cathie Wood-managed ETF focuses on companies involved in autonomous technology, robotics, artificial intelligence, energy storage, and next-generation transportation.

The fund has an expense ratio of 0.75% and invests at least 80% of its assets in companies tied to autonomous technology and robotics.

Drone Stocks and ETFs Could Quietly Deliver Big Gains

Drones may not sound like the most exciting investment theme.

But sometimes the most “boring” ideas are the ones that quietly produce the biggest gains.

With the global drone market expected to grow significantly, Chinese-made drones facing restrictions, and demand rising across defense and commercial industries, drone-related stocks and ETFs could see strong upside in the years ahead.

For investors looking for exposure, names like AVAV, DPRO, and LHX are worth watching.

And for those who prefer a basket approach, ETFs like ITA and ARKQ may be two of the easiest ways to play the drone boom.

That’s a topic for another article on another day. In this article, I’m just taking you where the data is leading. It starts with the iShares U.S. Aerospace & Defense ETF (BATS: ITA), an industry proxy. It’s up more than 44% year-to-date.  

That’s a nice gain. However, there are some individual stocks within the ETF that are doing 10% or 20% better, and some that are even doing better than that. But as every fund investor knows, when it comes to an ETF, you have to take the trash with the treasure.  

That sounds harsh, but some of the stocks inside this ETF are lagging the market. That includes some “big names” that have a negative return this year.  

The question is, are these valuations justified? They may be. Critics will argue that as the defense industry transitions into new technologies, it’s becoming more opaque. On the other hand, these new technologies are redefining the nature of battle and mean a rethinking of the nation’s military industrial complex.  

If you’re comfortable investing in the ITA ETF, here are two defense stocks that may make you reconsider that decision. I’ll also look at one “big name” defense stock that is a laggard, but perhaps not for long.  

RTX: The Mega Cap Beast That Continues to Gain Strength 

RTX (NYSE: RTX) may be more familiar to investors by its former name Raytheon. That was before it became the parent company of Pratt & Whitney and Collins Aerospace. The company is a dominant force in the defense sector, particularly with many of the cutting-edge technologies that the modern military needs.  

RTX has a backlog of $251 billion. That’s close to three years of revenue and provides strong visibility of the company’s future revenue and earnings. Much of this backlog comes from aircraft engines and defense systems that will remain essential to U.S. and allied militaries for years to come. 

RTX is also well-positioned to benefit from the Trump administration’s Golden Dome initiative, a proposed multi-layer missile defense system that would rely heavily on Raytheon’s radar, interceptors, and command systems. This project could mirror the strategic scale of Cold War–era programs, offering RTX a long runway of defense-driven growth. 

The stock is up about 54% year-to-date, outpacing the broader defense sector and contributing significantly to the ITA ETF’s strong performance. In what will be a familiar theme for these defense stocks, RTX stock has a current price-to-earnings (P/E) ratio of 36x, well above its historic average. But its forward P/E ratio is around 28x, which puts it firmly in line with its own history.  

Investors also benefit from a solid dividend, with a 1.52% yield, and backed by consistent free cash flow, which is expected to come in at over $7 billion in 2025.

GE Aerospace: The New Powerhouse of Modern Defense 

GE Aerospace (NYSE: GE) officially separated from General Electric in April 2024, and the streamlined, defense-focused business has quickly become one of the darlings of Wall Street. GE stock is up more than 86% year-to-date, powered by record demand for jet engines, defense propulsion systems, and advanced avionics.  

A key advantage for GE Aerospace is its strong position in both commercial and military aviation. As the global fleet expands and nations modernize their air forces, GE’s LEAP and GE9X engines remain indispensable.  

Defense programs like the F-35 and B-52 re-engine initiative further enhance its growth outlook. The company is also moving aggressively into AI-driven predictive maintenance and digital twin technologies, which improve reliability and reduce downtime for defense clients. 

Financially, GE Aerospace boasts expanding margins, a growing backlog exceeding $135 billion, and rising free cash flow. With its new focus, the company trades at a premium valuation, but investors see it as a best-in-class operator that combines industrial discipline with defense-sector momentum.  

Lockheed Martin: The Comeback Kid of Defense Stocks 

Lockheed Martin (NYSE: LMT) is synonymous with the defense industry for good reason. The company is the country’s largest defense contractor, with a backlog of over $179 billion. That’s over two years of the company’s revenue.  

However, LMT stock is down 5.5% year-to-date and is down 19.5% in the last 12 months. The reason is that many defense contractors, even the largest names like Lockheed Martin, are subject to the whims of the federal government.  

But wait, you say. Didn’t the government increase the defense department’s budget to record levels? It did as part of the Trump administration’s One Big Beautiful Bill.  

However, at the beginning of the year, some defense contracts were put on hold, subject to review by the Department of Government Efficiency (DOGE). The government shutdown also paused some of these projects.  

But the government is reopening and, as of this writing, that will include funding for the defense budget through 2026 regardless of what shenanigans happen in the interim. That’s a bullish sign for a company that recently added $2 billion to its share buyback capacity.  

LMT stock trades at a current P/E ratio of around 25x earnings, which is a premium to its historical average. However, the stock’s forward P/E ratio of 16x puts the stock at a discount. Shareholders also get a safe dividend that yields over 3% and has increased for 22 consecutive years.