What’s in a name? It’s an age-old question asked by everyone, even Barron’s.
Raytheon Technologies
(ticker: RTX) is no longer
Raytheon Technologies.
It’s RTX. The change happened Monday.
Why the name change isn’t certain. RTX didn’t respond to a request for comment.
Longer names have outperformed shorter names lately in the stock market lately. The average return of the shortest quintile of names in the
S&P 500
is about 15% over the past year. The longest names have returned about 19%. The return of the average stock in the S&P is also about 19%.
Companies with three-letter names, or shorter, have done even worse than the shortest quintile. The average for two or three-letter names is a woeful 3%. That list includes
3M
(MMM) and
AT&T
(T), though the & could count as another letter.
RTX is now joining the list of three-letter companies. Its shares have returned less than 10% over the past 12 months. Investors are optimistic about the aerospace business as travel recovers from pandemic-induced lows, but defense stocks haven’t been as strong.
Airbus
(AIR.France) shares have returned about 30% over the past 12 months. Shares of
Northrop Grumman
(NOC) have returned just about zero.
The one thing RTX has going for it is a three-letter ticker. Longer stock symbols, or tickers, have outperformed shorter ones this past year. Three-letter tickers in the S&P 500 have returned about 17% on average over the past 12 months. One-letter ticker stocks have been terrible, returning about 2%.
The best are four or five- letter tickers. They have returned 25% over the past 12 months. It probably doesn’t hurt that
Apple
(AAPL),
Nvidia
(NVDA),
Tesla
(TSLA),
Amazon.com
(AMZN),
Microsoft
(MSFT)
Meta Platforms
(META), and
Alphabet
(GOOGL) all have four-letter tickers. Those seven have returned almost 60% on average over the past 12 months.
If there is an investing lesson in this the single letter stock tickers tend to be taken by older firms including
AT&T,
Macy’s
(M,) and
United States Steel
(X). The market wants new technology these days. Those three have returned roughly zere over the past 12 months with a big gain from U.S. Steel offset by losses at AT&T.
It’s probably a bad idea to invest based on a corporation’s name or the length of its stock symbol. In the end, the only thing to note from Monday’s news is that Raytheon has a new name.
Write to Al Root at [email protected]
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