The SpaceX IPO is a trap (From Behind the Markets)

Airline companies have been a bellwether of the market's reaction to the ongoing Iran war in recent weeks. While share prices in many of the leading airline firms dropped after the United States initiated attacks, many have subsequently recovered. This is not the only instability to rock the industry this year; as budget carrier Spirit Airlines announced it will shut down, uncertainty may have risen among investors once again.

Despite these challenges, there may still be opportunities in the broader aerospace industry. Specifically, investors might look to companies involved in the maintenance of aircraft, those that manufacture and distribute aftermarket components, and related operations. Some of these firms have been hit hard by uncertainty surrounding the war, but they retain strong underlying business and could be poised to soar when the external conditions are right.

TransDigm's Base Business Is Strong, Even as Middle East Conflict Threatens Share Price

TransDigm Group Inc. (NYSE: TDG) designs and builds engineered aircraft components and systems for both commercial and military uses. Though the overall aerospace industry has performed well so far in 2026, TDG shares have not. The company has experienced a share price drop of about 10% year to date (YTD). The drop may be due to risks to its commercial aftermarket business stemming from both inflation and geopolitical factors.

At the same time, TransDigm has shown signs of strength, particularly in its latest earnings report, released in early May 2026. The firm posted solid beats on both the top and bottom lines, with earnings per share (EPS) increasing by more than 8% year-over-year (YOY) and revenue surging by more than 18% over the same timeframe.

TransDigm drew investor attention last summer when it announced a special dividend that was 20% higher than a similar special dividend issued in 2024. There is, of course, no guarantee that the firm will provide another distribution of this kind, but given the timing of the last two years, investors might watch for signals in late summer that another payout may be on the way.

Now, investors may be of two minds about this firm as the Middle East conflict continues. On one hand, management acknowledged in the last earnings report that the company may see softer commercial aftermarket business through the coming quarters because of reduced flight activity. On the other hand, though, TransDigm has raised its fiscal 2026 guidance, with midpoint revenue of $10.4 billion, about 17% higher than previously estimated. Surprisingly strong base business performance is likely to drive that performance, as well as a projected increase in EBITDA and EPS.

Together, this means that TransDigm's business could remain appealing even as external factors may prolong its share price dip, presenting a buy opportunity for those willing to wait. Analysts are split on TDG shares, though they do anticipate about 27% in upside potential.

An Oft-Forgotten Company in the Aerospace Industry With Growing Revenue, Bookings, and More

If TransDigm has struggled YTD, Axon Enterprise Inc. (NASDAQ: AXON) is in even worse shape. Shares of the company best known as the maker of TASER energy weapons have fallen by roughly 35% in 2026. Many investors may not know that Axon is also involved in the aerospace industry—specifically through unmanned aircraft systems, including maintenance, hardware, and software development for drones used in multiple capacities.

In the first quarter of 2026, Axon saw revenue surge by over a third YOY to $807 million, beating estimates, prompting leadership to raise full-year revenue growth guidance to a range of 30% to 32% YOY. The company has been able to navigate the threat of AI well so far, and Axon's AI Era Plan has experienced 140% YOY bookings growth. Enterprise and international momentum are continuing.

Cash flow remains fairly strong, with the company predicting about $450 million in free cash flow this year. However, Axon is committed to deploying significant cash to bulk up its inventory this year in anticipation of potential supply constraints, which may hinder some of its ability to expand operations in other areas.

With a price-to-earnings (P/E) ratio of nearly 150, AXON shares are still not cheap. Nonetheless, Wall Street's assessment of the stock is very positive: 16 out of 19 analysts have rated it a Buy. The consensus price target above $712 per share also represents a massive jump above current price levels.

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