Key Takeaways
- A firm that manages $1.03 billion opened a stake in L3Harris (LHX) and added sharply to Kratos (KTOS) and McDonald’s (MCD) in the Q3.
- Kratos, the biggest buy, is down 17% since Sept. 30 despite a strong quarter, as analysts keep cutting targets.
- McDonald’s is up 20% since Sept. 30, which leaves 8% upside to analysts’ average target.
- Of the three, L3Harris has the strongest case: a raised 2026 outlook, a record backlog and 29% upside to the average target.
A firm that manages $1.03 billion ended the Q3 with two defense contractors and a burger chain near the top of its holdings.
B&D White Capital Company’s 13F for the quarter ended Sept. 30, filed Nov. 2, shows a far bigger stake in Kratos, a brand-new one in L3Harris and a bigger one in McDonald’s.
All three have reported since, and the stocks have gone very different ways.
TIKR tracks 25 analysts on Kratos. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Kratos, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Kratos’ Analyst Ratings
Kratos was the biggest bet, and it’s down 17%
The fund lifted its Kratos share count 21,357% in the quarter, to 1.82 million shares worth $78 million at Sept. 30. That’s a new bet in all but name, and it made Kratos the fund’s No. 3 holding at 7.6% of its 13F stocks.
From its Sept. 30 price to Friday’s close of $35.10, the stock is down 17%, and it sits 74% below its 52-week high.
Kratos’s Q3, reported Nov. 5, was strong on most counts: revenue grew 35.7% to $471.8 million, and bookings of $1.04 billion came in at 2.2x revenue.
The exception was Kratos Unmanned Systems. Its revenue fell to $74.6 million from $87.2 million a year earlier (that quarter included a $16.1 million Valkyrie shipment), and its backlog slipped to $357.4 million from $374.6 million at the end of Q2.
Analysts have been cutting all year. Their average target peaked at $119.45 in late March and now sits at $87.44, its lowest point of the past year:
That’s still 151% above Friday’s close, and KeyBanc cut its target this month but still saw 83% upside.
But the lowest of the 25 analysts’ targets has fallen to $50 from $80 a year ago, and even after the selloff, Kratos trades at 33.5x forward earnings.
L3Harris has the numbers on its side
The second defense stock on the list is L3Harris, the only brand-new position of the three: 248,330 shares worth $59 million at Sept. 30, or 5.7% of its 13F holdings and its No. 4 holding.
The stock is up 8% from its Sept. 30 price to Friday’s close of $259.89, though it’s still 22% below its 52-week high.
On Oct. 29, L3Harris reported Q3 revenue of $6.1 billion, up 7%, and $19.3 billion of orders, which took its backlog to a record $53.2 billion. It also raised its 2026 GAAP EPS outlook to $12.25-$12.35, from $11.80-$12.00.
Unlike Kratos’s, L3Harris’s average target has barely moved over the past year, at $335.20 against $334.28 a year earlier:
The average dipped to $316.65 in mid-October and has since climbed back. It sits 29% above Friday’s close, from 23 analysts, and the stock trades at 20x forward earnings.
McDonald’s has already had its run
The third buy has nothing to do with defense. The fund added 94% to its McDonald’s position, to 153,880 shares worth $36 million at Sept. 30, or 3.4% of its 13F stocks and its No. 7 holding.
At that quarter-end, McDonald’s traded at 17x forward earnings on TIKR, its lowest quarter-end reading since 2014 and well under its 23x average since then.
The stock is up 20% from its Sept. 30 price to Friday’s close of $276.52. It jumped on Nov. 4, when adjusted EPS rose 11% to $3.57 and beat estimates, even though U.S. comparable sales fell 0.2%, their first decline in six quarters, and revenue grew just 1%.
CEO Chris Kempczinski called entry-level value the “final piece that’s missing,” and McDonald’s plans to roll one of the two value menus it’s testing out nationwide in early 2027.
Analysts have gone the other way. Their average target fell from $330.67 a year ago to $299:
That leaves 8% upside, from 34 analysts. At 21x forward earnings, most of the discount McDonald’s had at Sept. 30 is gone.
L3Harris is the one I’d buy
If I could only buy one of the three right now, it’d be L3Harris.
Its orders hit a record last quarter, analysts haven’t cut their average target, and 20x forward earnings is a fair price for that. The hard part is turning that backlog into revenue, and CEO Sam Mehta said as much in the Q3 release: “Our priority now is to convert that demand into results.”
Kratos could still prove the fund right if its unmanned backlog starts growing again, but I’d want to see that before paying up.
And McDonald’s needs that value menu to bring U.S. guests back before I’d expect much more from the stock.
L3Harris’s Q4 report early next year, with its first look at 2027, is the next test. The fund’s next 13F, due by mid-February, will show whether it held on to all three.
So what is Kratos stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Kratos could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
