Should You Invest in the Select STOXX Europe Aerospace & Defense ETF (EUAD)?
If you're interested in broad exposure to the Industrials - Aerospace & Defense segment of the equity market, look no further than the Select STOXX Europe Aerospace & Defense ETF (EUAD), a passively managed exchange traded fund launched on October 22, 2024.
Watch These 3 Defense Stocks to Know if EUAD Can Hold Its Gains
The Select STOXX Europe Aerospace & Defense ETF (NYSEARCA:EUAD) has snapped back hard after a sluggish start to the year.
EUAD: My Favorite ETF Strategy On Top Of Europe Defense Tailwinds
Select STOXX Europe Aerospace & Defense ETF (EUAD) offers concentrated exposure to European defense firms benefiting from rising geopolitical tensions and increased EU/NATO defense budgets. EUAD's top holdings possess strong economic moats, diversified military-commercial revenue streams, and new growth drivers like counter-drones and satellite communications. Relative and absolute valuation suggest EUAD is 16–18% undervalued, with a Fair Value estimate around $48 versus the current ~$41 price.
Watch These 3 Contract Signals Before EUAD's Next Move
Select STOXX Europe Aerospace & Defense ETF (NASDAQ:EUAD) was the cleanest way to own European defense stocks from a U.S.
Should You Invest in the Select STOXX Europe Aerospace & Defense ETF (EUAD)?
Designed to provide broad exposure to the Industrials - Aerospace & Defense segment of the equity market, the Select STOXX Europe Aerospace & Defense ETF (EUAD) is a passively managed exchange traded fund launched on October 22, 2024.
EUAD: Europe Has No Choice, And This ETF Could Be The Big Beneficiary
I recommend buying the Select STOXX Europe Aerospace & Defense ETF for its superior risk-reward profile versus U.S. peers. EUAD benefits from Europe's largest defense investment cycle since the Cold War, with military spending rising toward 2% of GDP in 2025. EUAD trades at a 30x P/E, offering a 20% upside if it re-rates to XAR's 36x multiple, reflecting potential for valuation catch-up.
ETFs to Consider Amid Geopolitical Woes and Higher US Military Budget
Trump's $1.5T military budget and rising global tensions could lift defense ETFs and spill over into cybersecurity, AI, manufacturing and space ETFs.
Look to This Hot Europe ETF as the Continent Rearms
Market uncertainty is more than just Fed or domestic policy related; often, geopolitics can have an even bigger impact on the fate of the markets than either of those factors. While not as severe as the impact left on the world by the pandemic, the threat of war also looms.
EUAD: Incursions In EU Highlight Need For Drone Defense And Rearmament
The Select STOXX Europe Aerospace & Defense ETF is well-positioned to benefit from Europe's increasing focus on drone warfare and defense spending. Recent drone incursions and calls for a European 'drone wall' could drive significant demand for anti-drone technology, benefiting EUAD's holdings. EUAD is fairly valued compared to U.S. peers but offers a higher potential upside if European military spending materializes.
EUAD: Entering A NATO Super Cycle
I rate EUAD a Buy as Europe's defense sector enters a super cycle driven by NATO's increased spending to 3.5% of GDP. EUAD offers convenient, concentrated exposure to top European defense names, with a 12% upside potential plus a 1% dividend yield. Consensus forecasts 20% annual earnings growth with a reasonable 1.3x PEG ratio versus US peers at 2x.
Moves To Bolster Defense In Europe Will Bolster EUAD In Your Portfolio
Select STOXX Europe Aerospace & Defense ETF is well-positioned to benefit from Europe's defense spending increases, driven by geopolitical tensions and a renewed focus on security. Drones and cybersecurity are key growth areas, with holdings like Airbus, BAE Systems, and Thales poised to capitalize on evolving warfare trends. EUAD offers geographic diversification and exposure to both traditional and emerging defense technologies, balancing risk and opportunity.
Select STOXX Europe Aerospace & Defense ETF Is Flying Higher
Europe's renewed focus on aerospace and defense spending creates a strong growth runway for the Select STOXX Europe Aerospace & Defense ETF. The ETF offers diversity and opportunity to invest in leading European defense and aerospace firms, while reducing single-stock risk and capturing sector momentum. Geopolitical tensions, EU self-defense initiatives, and massive investment commitments underpin long-term demand for European defense companies.
