The best defense stocks boast long-term programs as well as a foothold in emerging priorities for the US and its allies, while the Russia-Ukraine war drags on.
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Russo-Ukrainian War Affects Defense Stockpile
Defense stockpiles surged after Russia’s invasion of Ukraine in February. As the war drags on and the nuclear threat grows, defense stocks are outperforming the broader stock market.
“Defense Stocks Included”NOC, LMT and RTX are very well positioned Ken Herbert, analyst at RBC Capital, said in a recent note benefited from increased funding related to nuclear missiles.
The US and its European allies are spending billions of dollars in military aid to Ukraine. They are sending weapons like Lockheed Martin (LMT) javelin-launched anti-tank missiles and Raytheon (RTX) Stinger air defense system.
In the long run, the Ukraine war could also mean increased military spending.
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NOC . shares
Northrop Grumman (NOC) total revenue reaching 35.67 billion dollars in 2021.
NOC shares earn IBD Overall Rating out of 87, EPS Rating out of 72 and RS Rating 94, out of the best 99 possible.
The relative strength line for Northrop stock has surged to a one-decade high, according to MarketSmith Analysis. A strong RS line indicates a stock is outperforming the S&P 500 index.
Northrop produces the B-2 stealth bomber and will also build the next-generation stealth bomber B-21. The B-21 could eventually replace the B-2 as well as the Cold War-era B-52.
The defense company is a major subcontractor in Lockheed’s F-35 program and also manufactures drones like the Global Hawk. Meanwhile, the purchase of Orbital ATK has boosted their space offerings.
Additionally, Northrop Grumman is developing the US Air Force’s next-generation intercontinental ballistic missile system, called the Sentinel. In a recent commentary, the RBC noted that the NOC is “best positioned to benefit from continued nuclear refinancing efforts.”
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LMT . Stock
Lockheed Martin (LMT) generates $67 billion in revenue by 2021.
LMT stock’s relative strength line is hitting new weekly highs MarketSmith . chart. That is marked with a blue dot at the end of the RS line. The stock has a Composite Rating of 89, an EPS of 83, and an RS Rating of 91.
Lockheed builds the F-22 and F-35 fighter jets. Its F-35 Lightning II program promises to be a major moneymaker for years to come. Stealth fighters will be key to counter Russia and China.
The US and its allies have 3,100 F-35s on order through 2035, making Lockheed one of the best defense stocks for stable and long-term revenue.
And many more countries are lining up. In the wake of Russia’s invasion of Ukraine, Germany and Canada have announced plans to buy dozens of F-35s.
Meanwhile, Lockheed has significant hypersonic weapons in the works. For NASA, Lockheed is developing the Orion spacecraft. With Boeing, it builds and operates rockets to launch spacecraft into orbit.
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General dynamics (GD) brings in $38.5 billion in revenue in 2021. The RS line for General Dynamics is also hitting a high on the weekly MarketSmith chart. GD stock has a Match Rating of 82, an EPS Rating of 70 and an RS Rating of 91.
General Dynamics will also benefit from greater international sales as NATO countries increase sponsorship
U.S. Navy ships and submarines help define General Dynamics, making it one of the best defense stockpiles. GD helped build the Littoral Combat Ships, and it also built the Virginia and Columbia class submarines.
GD also builds the Arleigh Burke-class missile destroyer, a ZumwLalt-class next-generation battleship and destroyer. Its NASSCO unit builds support ships for the Navy.
Also General Dynamics supplies the US Army. It builds Abrams tanks, Strykers, and light armored vehicles.
Meanwhile, their Gulfstream jet is aimed at corporate customers.
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L3Harris Technologies (LHX) generated nearly $18 billion in revenue in 2021.
The RS Line for L3Harris is up but still below the 2019 high. LXH stock has a Composite Rating of 87, an EPS Rating of 83 and an RS Rating of 84.
The company is headquartered in Melbourne, Fla. provides defense technologies in the air, on land, at sea, in space and in cyberspace. Analysts also expect L3 Harris to benefit from demand following Russia’s invasion of Ukraine, as governments look to replenish their arsenals.
The company that emerged from the merger of Harris Corp. and L3 Technologies in 2019. Three years later, L3Harris Technologies is winning Pentagon deals worth billions of dollars, DefenseOne report. Over the summer, it won a military contract that could be worth $3 billion for up to 75 attack aircraft.
Elbit Systems Stock
The Elbit System (ESLT) generates nearly $17 billion in 2021 revenue.
The RS Line for ESLT stock surged in the first half of 2022. It’s not much lower than the July 1 high. Elbit System has a Comp Rating of 72, an EPS Rating of 57 and an RS Rating of 90.
Founded in 1996, the Israeli company develops and supplies a large portfolio of air, land and naval systems for military and commercial aviation. These include the Unmanned Aircraft System (UAS), which it describes as the backbone of the Israel Defense Forces.
Combined, Israel, the US, and Canada account for more than half of Elbit Systems’ revenue.
Meanwhile, aviation and defense giant Dow Jones Boeing (father) is still not far from the June low. Shares of Boeing have tumbled over the past year, in part due to difficulties in the commercial airline industry.
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