Here are SunTrust's top aerospace and defense picks for the second half

Published Mon, Aug 21 20173:53 PM EDTUpdated Mon, Aug 21 20174:53 PM EDT

SunTrust research narrowed down its favorite aerospace and defense stocks and issued new price targets for each of the top picks. "We provide a comprehensive look back at 2Q17 earnings, including company-by-company commentary, growth rates, notable themes, and sector specific trends," wrote analyst Michael Ciarmoli. "We encourage investors to stay long defense and aftermarket names but offer up a new set of top ideas for 2H17." The aerospace and defense sector is up 18.1 percent since year's start, outperforming the S & P index by nearly 10 percentage points, according to Ciarmoli's report. Aircraft giant Boeing currently has the largest weighting in the Dow Jones industrial average and is up more than 50 percent year to date. Here are three of SunTrust's favorite aerospace and defense picks into the second half of the year: 1) Wesco Aircraft ( WAIR ) "WAIR stock is down 52% YTD, meaningfully underperforming peers largely due to execution missteps, and sentiment is poor. New management team is now in place and we expect the worst is in the rearview mirror. We look for margins to improve off lows of F3Q17 while $802M of inventory (more than current market cap) offers downside protection." SunTrust's Ciarmoli has a buy rating and $12 price target on Wesco, which is 55 percent higher than Friday's close. 2) AAR ( AIR ) "We think AIR is well positioned in the commercial aero aftermarket and has been generating low double digit growth, yet trades at a discount to the peer group. Near-term catalysts include INL contract decision, upcoming analyst day, and potential to benefit from Boeing's increased penetration into the aftermarket." The analyst has buy rating and $41 price target on AAR, representing 16 percent upside from Friday's close. 3) Orbital ATK ( OA ) "In our view, OA is a solid play on short cycle defense that should continue to see B2B remain above 1.0x through 2017. Look for increased focus on missile defense and precision weapons to be primary driver of near-term revenue growth. Stock still trades at a discount to the peer group (15.6x FY2 PE vs 19.9x), which we think makes shares look even more attractive." Ciarmoli has a buy rating and a $121 price target on Orbital ATK, which is 15 percent higher than Friday's close. Correction: Boeing has the largest weighting in the Dow Jones industrial average. An earlier version mischaracterized its status.

Chris Book performs maintenance work on the floor in the cargo hold of a Boeing 737 at the AAR Corp. in Indianapolis.

Michael Conroy | AP Photo

SunTrust research narrowed down its favorite aerospace and defense stocks and issued new price targets for each of the top picks.

"We provide a comprehensive look back at 2Q17 earnings, including company-by-company commentary, growth rates, notable themes, and sector specific trends," wrote analyst Michael Ciarmoli.

"We encourage investors to stay long defense and aftermarket names but offer up a new set of top ideas for 2H17."

The aerospace and defense sector is up 18.1 percent since year's start, outperforming the S&P index by nearly 10 percentage points, according to Ciarmoli's report.

Aircraft giant Boeing currently has the largest weighting in the Dow Jones industrial average and is up more than 50 percent year to date.

Here are three of SunTrust's favorite aerospace and defense picks into the second half of the year: