Risks of owning aerospace stocks
The outlook for aerospace is strong, but there are risks investors should consider. Historically, the sector has been cyclical. Defense stocks, for example, fell on hard times at the end of the Cold War, and commercial aerospace is closely tied to airline demand and can lag if the economy falters.
These airplanes and spacecraft require massive research and development spending, and each airframe comes with a huge price tag. Investors must be aware that mistakes can cost shareholders dearly and take years to fix.