The defense industry is constantly evolving and introducing new weaponry, including combat vehicles, ships, and even fighter jets. Companies in the defense sector are specialized and offer a wide range of products for the US government and foreign governments and law enforcement agencies. Defense stocks are one of the safest investments in terms of their long-term revenue growth and demand, making them a good investment option for investors looking for stability. Here are the best war stocks that you as an investor can invest in.
What Stocks Do Well in War?
When it comes to war stocks, we want to find the best ones to invest in. Hopefully, it’s not because we’re in a war. However, if you pay any attention to Congress, then you know they’re pro-war. Why? Because war is profitable. And the stocks we’re about to take a look at benefit from war.
But just because they’re defense stocks doesn’t mean that’s the only purpose they serve. They’re branching out into different things. Like space for example. So it’s a new and exciting frontier that could have a lucrative future.
Boeing BA is known for its commercial jets, and its defense and space programs accounted for $7.2 billion in the first quarter. They have has legacy fleets of fighter aircraft like the F/A-18 and also the F-15 that remain in production. In fact, Boeing has updated in the works.
Boeing recently received the first order for a $23 billion contract to build its F-15 EX fighters. The company is also making heavy investments in space, and its defense business has also branched out to autonomous submarines and other products.
Boeing has also been making heavy investments in space, and it is also building the crew space international transportation-100 starliner.
This will ferry astronauts to the international space station and the massive space launch system.
However, Boeing has a weak IBD composite rating of 33 and an EPS rating of 14 as troubles continue amid the coronavirus pandemic.
War stocks like Boeing will always have a place but hopefully, it won’t be because of war.
War Stocks: Lockheed Martin Corp
Lockheed Martin is engaged in developing advanced technology systems that include missile systems. And it’s also the primary contractor for F-35 fighter jets. The F-35 Joint Strike Fighter is the world’s most expensive airplane. The company also has an impressive backlog which is worth 2.2 times the company’s sale projections.
In the coming years, Lockheed’s focus on hypersonics, the development of a sixth generator fighter jet, and classified strategic and missile defense projects can aid company growth and expansion. The stock also has a “Buy” rating from experienced investors.
Maxar Technologies Inc
Maxar Technologies provides its clients with satellite communication services. The company provides satellite communication services where it offers both ground and space infrastructure; including designing and manufacturing satellites and spacecraft components for communications.
From an investor point of view, the future growth of Maxar is very bright as the US Department of State considers getting Maxars satellites into orbit a top national security priority. In fact, they’re intent on accelerating the program.
What Are Defense Stocks?
Defense stocks are more stable because they have a constant demand for their services. In fact, they don’t have to be war stocks at all. Defense stocks are anything that’s in demand. For example, Budwiser or Hershy’s are companies included in this category. They have nothing to do with war right?
Instead, they’re companies whose products people are always going to want. Will you ever pass up a candy bar? Only if you’re nuts. Although, me personally, I’d pass up a beer any day of the week. So I guess I can’t judge when it comes to things people don’t like.
Northrop Grumman Stock
Northrop Grumman is one of the world’s leading weapons and military technology producers. They’re a global security company that provides services and also security systems to clients in the aerospace.
The company has an extensive space portfolio and is closely tied to the nuclear triad. Hence why they’re on our war stocks list.
The stock has a market capitalization that exceeds $60 billion, and its shares are also trading above their 50-day and 200-day lines. The B-21 stealth bomber has also attracted much attention.
The government plans to buy 80 to 100 planes to replace the cold war era. Northrop is also a contractor for the air force ground-based strategic deterrent
The program is valued at $100 billion. This means that the return on investment for this stock is high. Northrop is a combination of a best-in-class national security portfolio. And it also has the capacity for aggressive share buybacks.
General Dynamics produces a wider range of vehicles and systems for the US Military. The company reported a $9.4 billion revenue in the first quarter of 2021 and $38 billion in 2020. The stock has a market capitalization of $55 billion. In fact, the company is one of the best shipbuilding defense stocks.
The company is a top provider of lands weapons systems. And the company’s Gulfstream business jets lead the aerospace segment. Once General Dynamics business jet, known as Gulfstream G700, goes into business, the aerospace margin for the company will improve. Bank of America has a “Buy” rating for this stock. So investors can also hope for high returns given that company’s growth accelerates at the current rate.
Viasat operates as a global communication company that provides broadband digital satellite communications and other wireless networking services. It also offers network control systems and information distribution systems.
Viasat provides its clients with high-speed satellite broadband services and secure networking systems covering military and commercial markets.
Investors will be happy to know that ViaSat has also secured a suite of licenses to provide high-quality satellite internet connectivity to Nigerian communities.
The company has demonstrated a continued top-line performance and has significant expansion plans, which means that it is a secure stock to invest in.
VSAT revenues have also increased over time from $1.6 billion in 2017 to $2.3 billion in 2020 due to overall growth in revenue across segments.
Since late 2020 the company has given weak quarterly results, but it’s also shown a continual improvement in demand. Once the COVID outbreak is in control, this stock has the potential to show significant gains.
How To Find The Best War Stocks
The war stock sector is considered to be a secure investment place because of massive governmental investment. However, the government has budgetary limits to follow. Therefore, it’s important to check the budgets every year if you consider putting your investment in war stocks. Defense stock growth tends to be highly influenced by the current situation. And they’re mildly affected by who’s occupying the white house.
On an individual level, it’s always best to keep a couple of metrics in mind. The book-to-bill ratio is an important metric to look for in a particular company, along with corporate backlogs. A developing company should have a book-to-bill ratio of at least 1.0. Meaning that future orders should be made at a rate that equals or exceeds what is being shipped and produced today. Defense stocks are best suitable for income-oriented investors and seeking consistent growth and rising dividends rather than immense valuation increases.