The recent sell-off in aerospace stocks could be creating opportunities for investors willing to look beyond the industry's near-term challenges, CNBC's Jim Cramer said Tuesday.
The group has been under pressure for months as higher oil prices and interest rates raise concerns about demand for new aircraft. Rising fuel costs squeeze airline profits — potentially forcing carriers to cut routes and scale back aircraft purchases. Higher rates make financing new planes more expensive, adding to those demand worries.
Even with gains of more than 3% on Tuesday, GE Aerospace is down 23% from its 52-week high of nearly $389 per share on Aug. 6. The stock is down 3% year to date. Boeing's slide of more than 10% on Tuesday put the CNBC Investing Club stock down 23% in 2026. For comparison, the iShares U.S. Aerospace & Defense ETF (ITA) is down roughly 4% year to date, while the broader market S&P 500 is up over 12.5% in 2026.
"If you're willing to look long-term here, I still think this sector will be a secular, long-term winner," the "Mad Money" host said. "The idea that higher fuel prices and higher interest rates will kill demand just looks flat-out wrong." Here's a closer look at where Cramer stands on the stocks.
GE Aerospace delivered a strong third quarter last week but still couldn't catch a break. Cramer sees the weakness as a buying opportunity, pointing to robust demand for the company's jet engines. Orders in GE's commercial aerospace business surged 58%, including a 235% increase in equipment orders, pushing its backlog to $170 billion.
"Remember, the big concern for the Aerospace sector – the reason these stocks have been falling for the past couple of months – is the idea that higher oil prices and interest rates will result in fewer plane orders and, thus, fewer jet engine orders for GE," Cramer said. "But those incredible order numbers from GE – especially on the Commercial side, and for new equipment – show it's clearly not the case."
The quarter wasn't without its shortcomings. Free cash flow fell 14% year over year and came in slightly below expectations, while GE's valuation remains elevated at roughly 37 times the midpoint of its updated full-year earnings guidance.
"When you have a lofty multiple like this, it has to be a clean 'beat-and-raise' and we didn't get that," Cramer said. Still, he said the strength of GE's underlying business outweighs those concerns. "GE looks fine to buy now."
While reporting a generally mixed third quarter on Tuesday, free cash flow did beat estimates. FCF is the metric to watch in Boeing turnaround efforts. However, it was remarks on the earnings call that sent the stock to 52-week lows. Management outlined a multiyear outlook on free cash flow that fell short of expectations, partly because of upfront spending tied to a new contract to develop next-generation fighter jets for the U.S. Navy. Executives also said the company would not significantly ramp up 737 Max production until late next year.
"I'm hopeful that this reset can be a clearing event," Cramer said. "Some investors will give up, but everyone who remains will be using a new, more realistic set of free cash flow targets going forward."
Still, Cramer pointed to Boeing's substantial order backlog as evidence that demand for aircraft remains strong. The company received 300 net commercial aircraft orders during the quarter, bringing its commercial backlog to more than 6,300 planes valued at a record $612 billion. The company's defense backlog also reached a record $101 billion.
While facing a tougher road ahead than GE Aerospace and its shares could slip further, Cramer does remain optimistic about Boeing's longer-term prospects, provided management can deliver on its revised targets.
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