L3Harris Technologies, Inc. (LHX): A Bull Case Theory

We came across a bullish thesis on L3Harris Technologies, Inc. on Investing With Purpose’s Substack. In this article, we will summarize the bulls’ thesis on LHX. L3Harris Technologies, Inc.'s share was trading at $281.86 as of September 17th. LHX’s trailing and forward P/E were 31.49 and 22.83 respectively according to Yahoo Finance.

The company, with a market capitalization of approximately $52–53 billion and a backlog of $35.4 billion, presents a compelling investment profile supported by scale, visibility, and cash flow generation. In Q2 2025, it reported revenue of around $5.4 billion, reflecting 6% organic growth, with operating margins of 10–12% and net margins near 8%. Free cash flow is expected to reach $3 billion in FY26, highlighting the company’s strong internal capital generation. Its business is diversified across space payloads, ISR systems, tactical radios, and propulsion via Aerojet, offering exposure to multiple high-value segments within aerospace and defense.

Valuation metrics indicate an EV/Sales of 2.5–2.7×, EV/EBITDA of 15–16×, and a forward P/E of approximately 25×, suggesting a balanced pricing relative to growth and profitability. The company’s portfolio combines scale with a highly visible backlog, providing reliable revenue streams and making it a stable core holding within the sector. While 76% of sales are U.S.-dependent—a structural risk—this exposure is partially mitigated by the stickiness of its long-term government and defense programs, which create durable relationships and recurring contracts.

The company’s combination of diversified high-tech segments, predictable cash flow, and strong backlog positions it as a central anchor for investors seeking stable, mid-to-long-term exposure to aerospace and defense. Its financial strength and operational scale provide resilience against market volatility, while the forward-looking cash flow generation offers flexibility for strategic initiatives or shareholder returns, reinforcing its status as a dependable core investment within the group.

Previously we covered a bullish thesis on Lockheed Martin Corporation (LMT) by Steve Wagner in April 2025, which highlighted strong first-quarter performance, robust backlog, and strategic ISR-focused acquisition. The company's stock price has appreciated approximately by 1.35% since our coverage. The thesis still stands as LMT’s operational discipline and growth trajectory remain intact. Investing With Purpose shares a similar perspective but emphasizes L3Harris Technologies’ diversified segments, strong free cash flow, and visible backlog.

L3Harris Technologies, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 53 hedge fund portfolios held LHX at the end of the second quarter which was 42 in the previous quarter. While we acknowledge the potential of LHX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.