For years I watched the BAE Programs (LSE: BA) share price climb and climb, questioning whether or not I’d missed my likelihood to purchase the FTSE 100 defence and aerospace producer.

It’s a standard downside with momentum shares. I’m all the time apprehensive I’ll purchase simply because the inventory runs out of highway. However I made a decision I’d waited lengthy sufficient and dived in on 7 March at round £13 a share.

Unbelievably it carried on climbing so I averaged up on 8 Could at round £14 and inevitably that’s when the highway ended. Sod’s regulation strikes once more.

Can this FTSE 100 inventory proceed to fly?

I’m solely down a number of proportion factors so I’ve received little to complain about. The shares had been sure to idle after the robust run they’ve had. They’re up 17.94% over 12 months and 131% over 5 years.

I want to purchase shares after they’ve fallen out of favour, after they’re low-cost and seem like a discount. It’s uncommon for me to purchase a inventory buying and selling at 20.44 occasions earnings, as BAE Programs does immediately.

I nonetheless suppose it’s an amazing long-term buy-and-hold although. Sadly, that’s for all of the flawed causes because the world will get extra warlike. Nonetheless, a lot of that’s priced in, with Financial institution of America lately noting that European defence shares had been buying and selling at a 47% premium relative to the index.

BAE Programs has a price-to-revenue ratio of 1.7, which suggests traders need to pay £1.70 for every £1 of gross sales. So it seems to be dear by that measure too. However then, it normally does. As a result of it’s an amazing firm.

On 1 August, it posted a 13% rise in gross sales to £13.4bn, however it wasn’t all excellent news. Order consumption fell from £21.1bn to £15.1bn yr on yr. That’s nonetheless fairly good however a key cause markets love this inventory is its large order backlog, which provides nice earnings visibility. Any signal of a slowdown is due to this fact a fear. The board nonetheless expects gross sales to rise between 12% and 14% this yr, beating earlier steering.

No inventory rises in a straight line endlessly. In some unspecified time in the future, BAE Programs shares had been more likely to sluggish and even fall. However it’s unusual to see this occur as conflict rages in Ukraine, China menaces and the Center East will get uglier.

Brokers stay optimistic. The 15 analysts providing one-year share price forecasts have produced a medium price of £14.59. If appropriate, that’s up 13.5% from right here. No ensures although.

I’ll get a number of dividends and development over time

BAE Programs has a modest trailing yield of two.33%. Nonetheless, it has a great file of accelerating dividends. Let’s see what the chart says.

Chart by TradingView

As with all inventory, there are dangers. Peace may get away. Orders may drop as cash-strapped Western governments juggle priorities. Low-cost drones are altering the character of warfare, and large defence must modify.

However human nature suggests to me that BAE Programs might be promoting planes, tanks and ships for years to come back. I’d be astonished if this didn’t show probably the most profitable shares in my portfolio in the long term. The near-term is neither right here nor there.

I don’t remorse shopping for BAE Programs in March. Its shares hardly ever commerce at a reduction. The most effective time to purchase them is at any time when I’ve the money. And that’s what I did.