Forget Tesla – These Unstoppable Stocks Are Better Buys

People tend to see something as cheap when the price goes down and expensive when the price goes up. adzea popular electric vehicle and energy company, has fallen 16% over the past year and is down more than 40% from its all-time high.

It has to be a business, right? Not so fast. The stock still trades at 100 times estimated 2024 earnings, and Tesla and CEO Elon Musk are under pressure to perfect their self-driving technology. In other words, Tesla is undoubtedly an expensive and risky stock, even after the significant price drop.

Maybe you should consider your options before rolling the dice on Tesla stock.

Here are two stocks that have surged over the past year and have the fundamentals to continue rewarding long-term investors.

1. A growing aviation stock with room to run

The industrial conglomerate known as General Electric to generations of investors is gone. Today, after several spin-offs, GE Aerospace (GE 0.68%) she stays in her place. The company showed Wall Street that a smaller, more focused business can be better. GE Aerospace is one of the leading manufacturers of turbine engines for commercial and military customers. There are tens of thousands of GE engines in the wild, all of which need service and maintenance to stay in top shape. About 70% of GE Aerospace’s revenue comes from these recurring needs, making the stock more resilient in all economic climates than many other industrial companies.

GE Aerospace should enjoy strong growth for years. Global air travel is on track to grow through the 2040s as populations grow and economies in emerging markets mature. GE management is currently guiding for low-double-digit revenue growth through 2028, and analysts believe the company will grow earnings by an average of 24% annually over the next three to five years. Ironically, that’s a few percentage points higher than Tesla’s earnings growth estimates.

Remarkably, shares of GE Aerospace have nearly doubled over the past year. And yet, the stock trades at 43 times estimated 2024 earnings, less than half of Tesla’s valuation. Thus, you get superior growth in estimated earnings at a much less demanding valuation. Additionally, Tesla is very expensive compared to your typical auto stock, as the market sets the price in favor of self-driving. What if it doesn’t work? GE Aerospace doesn’t have that potential make-or-break risk of such a catalyst, so investors get a much simpler path to ROI with GE Aerospace.

2. Business should remain steady for this defense stock

Global geopolitical tensions boosted defense stocks such as RTX (RTX -0.56%). The stock is up more than 50% over the past year and is probably still a buy today. RTX is a conglomerate that builds various weapons and equipment for the United States government and its allies, as well as aircraft engines and systems for commercial and military applications. Unlike a consumer-driven company like Tesla, RTX’s biggest customer is the United States, which is no stranger to spending money and has practically bottomless pockets.

The US government’s growing debt is a valid long-term concern, but it’s hard to see the government cutting back on defense anytime soon. America’s allies are facing ongoing conflicts in Europe and the Middle East, and the US has already demonstrated its willingness to support them with military resources. Meanwhile, RTX, which generates significant revenue from commercial aviation, should enjoy the same industry-wide growth as GE Aviation over the next decade and beyond.

Analysts believe RTX will grow revenue by more than 10% annually over the next three to five years. It’s not as fast as Tesla or GE Aviation, but the stock is much cheaper. RTX currently has a forward P/E of 22 times earnings, a reasonable price for a business as broad as RTX and its expected growth. Plus, investors get the bonus of a solid dividend yielding 2% today. Investors could reasonably expect low double-digit total returns, barring any material changes in RTX’s valuation or business performance. RTX probably doesn’t have the upside potential that Tesla has, but it delivers solid returns without nearly as much stress.