What happened

Textron (NYSE:TXT) holders took a wild ride in May. The stock was down more than 10% mid-month after a lackluster earnings report, but it rallied in the final two weeks to close up 17.5%, according to data provided by S&P Global Market Intelligence.

So what

Textron was having a difficult time even before the pandemic, but COVID-19 threatened to push the company's long-awaited recovery back even further.

The company makes a collection of industrial assets, including helicopters, business jets, snowmobiles, and military equipment. Its aviation unit, which includes Cessna and Beechcraft, has been a drag on overall results in recent years but was expected to rebound in 2020. The prospect of an extended economic downturn, and consumers' unwillingness to travel, made investors worry that rebound would not materialize.

Artist rendering of the Bell V-280 unloading troops.

Textron's Bell V-280. Image source: Textron.

Textron gave investors little reason to get excited when it released earnings the last day of April, and indeed, the stock drifted lower in the days that followed. But the stock got a lift as the month continued thanks to improving broader market sentiment regarding the prospects of a post-pandemic reopening and hopes that whatever downturn follows will be short-lived.

The stocks hit the hardest tended to rebound the most as markets rallied. Textron, down about 50% year to date in mid-May, surged higher than most in the second half of the month.

Now what

That surge has continued in June with Textron up 26% month to date as of this writing. It's been a good start to the month for the entire aerospace sector, boosted by airlines rebuilding their schedules post-pandemic and a better-than-expected jobs number.

Even after the rally, Textron is still down 12% for the year. The stock has made back most of what it lost due to the pandemic but still faces the same challenges it had going into 2020. Even if the economy is recovering, it seems unlikely we will see an immediate upswing in business jet sales, and Textron has few other near-term catalysts to get investors excited about the business.

Down the road, there is strong potential, especially with Textron's military helicopter business. But that potential payoff is still years away. It's good to see the stock recovering, but it is hard to imagine this rally continuing through June and beyond.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.