The Motley Fool

Here’s why the BAE share price makes me want to buy now

Image source: Getty Images.

These gloomy Covid-19 days are throwing up all kinds of share buying opportunities. And I think BAE Systems (LSE: BA) is one of them. In February, with the shares buoyant, you might have thought you’d missed the boat. But just a month later, after the virus horror struck, the BAE share price was 36% lower.

With the near total shutdown of commercial aviation, I can understand why investors shunned BAE Systems during the crash. But I think they made a big mistake. BAE’s defence businesses account for 90% of its revenues, and I see those as rock solid. Defence is long-term work too, and do you think there’s going to be any real impact from the pandemic lockdown? I don’t.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

The BAE share price has recovered tentatively since March. But it’s still fallen 13% year-to-date, and is down 27% since that February peak. I reckon BAE shares could be one of the best FTSE 100 buys right now. A trading update Thursday has cemented my opinion.

High working levels

Though the firm’s working practices were certainly hampered by the pandemic, things are sounding very positive right now. Productivity levels in BAE’s defence business are improving, and the company says most of them “now have well over 90% of employees working“.

BAE also told us: “Demand for our capabilities remains high with order intake in line with our original expectations for the year“. The board does expect first-half profit to fall by around 15%. But really, that’s the kind of mild hit that so many companies can only dream of at the moment. I see no crisis here, and no reason for the BAE share price to be so low.

I’ve always seen BAE as a company with a strong grip on its finances, and a very firm long-term view. It’s not interested in pandering to short-term demands from the fickle market. Many companies wait until they’re practically at death’s door before they consider cutting their dividend, and keep promising it will continue. But BAE decided months ago to defer its decision on its 2019 final dividend. And this week’s update confirmed that it “will provide an update with the group’s half year results next month“.

BAE share price attractive

Whether the dividend is paid as originally intended, paid in a reduced amount, or totally suspended for the good of long-term liquidity, I think BAE shareholders will simply accept the outcome. It’s just not a company that attracts the get-rich-quick crowd, or those trying their hands at timing share prices in the short term.

If you want further examples of BAE’s long-term attractiveness, I can point you to its order backlog of approximately £45bn. The company is also still on target for recruiting a record number of apprentices. There should be around 800 news ones, and that kind of investment in people is the way towards decades-long progress.

I’ve always liked BAE as a long-term investment. And with the shares being depressed now, I’m seeing an even better buy.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.