BAE Systems share price has increased by 131%! But here's what happened when I invested in March

For years I watched the BAE Systems (LSE: BA) share price going up and up, I wonder if I missed my chance to buy FTSE 100 defense and aerospace manufacturer.

It's a common problem with fast stocks. I am always worried that I will buy as the stock runs out on the street. But I decided I would wait long enough and entered on March 7th at around £13 a share.

Unbelievably it continued to climb so I went up on the 8th of May at around £14 and of course that's where the road ended. Sod's law strikes again.

Can this FTSE 100 stock keep flying?

I'm only down a few percent so I have little to complain about. Stocks should be underperforming after the strong run they've had. They are up 17.94% in 12 months and 131% in five years.

I prefer to buy stocks after they are out of favor, when they are cheap and look like a bargain. Rarely do I buy a stock trading at 20.44 times earnings, as BAE Systems does today.

I still think it's a long-term buy though. Sadly, that's for all the wrong reasons as the world becomes more wary. However, most of that comes at a price, with Bank of America recently noted that European defense stocks were trading at a premium of 47% relative to the index.

BAE Systems has a price-to-earnings ratio of 1.7, suggesting investors should pay £1.70 for every £1 of sales. So it looks priced that way too. However, it usually does. Because it's a big company.

On 1 August, it posted a 13% rise in sales to £13.4bn, but it wasn't all good news. Order intake fell from £21.1bn to £15.1bn year-on-year. That's still pretty good, but the main reason the market likes this stock is its large order deficit, which provides good earnings visibility. So any sign of slowing down is a concern. The board still expects sales to rise between 12% and 14% this year, exceeding previous guidance.

No stock goes up in a straight line forever. At some point, BAE Systems shares may go up or down. But it is surprising to see this happening as the wars in Ukraine, China are dangerous and the Middle East is getting worse.

Consumers remain optimistic. The 15 analysts providing one-year share price forecasts have produced an average price of £14.59. If correct, that's up 13.5% from here. There are no guarantees though.

I will get more benefits and growth in the long run

BAE Systems' annual yield reached 2.33%. However, it has a good track record of increasing profits. Let's see what the chart says.

Chart with TradingView

As with any stock, there are risks. Silence may break out. Orders may drop as cash-strapped Western governments juggle priorities. Cheap drones are changing the nature of warfare, and major defenses will have to be developed.

But human nature suggests to me that BAE Systems will be selling planes, tanks and ships for years to come. I would be surprised if this doesn't prove to be one of the most successful stocks in my portfolio over time. The near term is neither here nor there.

I don't regret buying BAE Systems in March. Its shares rarely trade at a discount. The best time to buy them is when I have money. And that's what I did.