It’s Not Too Late to Get in on These Defense Stocks

If you think it’s too late to get in on defense stocks, think again. These companies are poised to reap the rewards of global chaos for the next decade at least. 

I know because I’ve been raking in huge gains on defense contractors for almost 10 years now. Admittedly, I was a little early to the party. Back when I started buying in, the defense budget was a fraction of what it is today and further hampered by sequestration budget caps.

Nevertheless, the direction things were headed was perfectly clear…

Russia was taking its first step toward active belligerence, seizing Crimea from Ukraine in 2014. China was saber-rattling over the South China Sea. And the Middle East remained a hotbed of open hostility, with ISIS running amok. 

Still, there were those that looked around and said, “This is probably just a blip.” 

It wasn’t. 

Over the past 10 years, things have gotten increasingly worse. Kettles of seething conflict have boiled over. Russia fully invaded Ukraine. The Middle East has erupted into a widespread regional war centered around Israel. And China has only furthered its ambitions to build a military buffer around Taiwan that it may one day invade. 

Well, if you think that’s bad, I’ve got some dispiriting news for you…

It’s going to get worse. The next decade is going to be even bloodier and even more chaotic. So if you think you’ve missed the run-up in big defense stocks, think again. 

Here are three of my favorites…

RTX Corp. (NYSE: RTX)

Formerly known as Raytheon, RTX outgrew its brand when it acquired commercial aerospace giant United Technologies. That brought Pratt & Whitney and Collins Aerospace into the fold. But the Raytheon unit is still crucial to America’s defense. 

I’ve been riding this stock hard over the past year, because it fell to an absurdly low price of $70 per share in October 2023. That was due to a product recall in its Pratt & Whitney division. 

Of course, I always knew it would bounce back. 

I said this multiple times and even listed the company at No. 4 in “The Wealth Advisory’s Top 10 Stocks to Own” video in November and called it “The Best Bargain Buy in the Defense Sector” right here in February.

The stock was trading around $80 in November, had recovered to $90 per share in February, and today is back up over $120.

RTX is a great defense pick because, among other things, it makes a lot of missiles and missile defense systems. 

For example, there’s the Patriot missile system, which is one of the most trusted, effective, and frequently deployed anti-air defense systems in the world. 

It’s also a partner with Rafael on Israel’s Iron Dome, which has seen a lot of work lately and is poised to see even more to come. 

In fact, RTX and Rafael recently announced plans for a new $33 million production facility in Arkansas that will produce Tamir and SkyHunter missiles.

It also recently won  a $1.3 billion contract award to co-produce more Javelin anti-tank munitions with Lockheed Martin.

Speaking of which…

Lockheed Martin (NYSE: LMT)

Lockheed Martin is typically where these conversations begin, as it’s the world’s largest defense contractor. 

Lockheed Martin most famously makes the F-35 Joint Strike Fighter. The F-35 has been much maligned for setbacks and delays (many of which were attributable to the pandemic and resultant supply chain disruptions), but the fifth-generation aircraft is the company’s biggest revenue generator. 

The program is forecast to deliver over $2 trillion over its life span. And the resumption of F-35 deliveries is a big reason LMT stock shot up in July, along with a stellar second-quarter earnings report.

Lockheed reported adjusted EPS of $7.11, beating estimates by $0.66. And revenue came in at $18.1 billion, roughly $1.1 billion higher than expected.

Lockheed also raised its full-year revenue projection to a range of $70.5 billion–$71.5 billion from its April guidance of $68.5 billion–$70 billion.

In addition to the defense sector, Lockheed Martin is also a major player in the burgeoning space economy. 

Lockheed Martin’s space unit actually led the company in growth last year with a 9% increase in sales. 

The growth comes from a slew of major government projects and missile defense systems, in particular.

For example, Lockheed recently won a massive $17 billion contract to develop the next generation of interceptors for America’s homeland defense. These are what we’ll rely on to counter nuclear and hypersonic threats from Russia and China. 

The company has also scored huge deals for tracking satellites to identify and respond to potential and incoming threats. 

LMT is a must-own long-term portfolio holding.

And finally…

Northrop Grumman (NYSE: NOC)

Similar to RTX, Northrop Grumman stumbled earlier this year, when it took a nasty $1.56 billion pre-tax charge against its next-generation stealth bomber.

Nevertheless, I expect the B-21 Raider to be a massive long-term revenue generator despite its setbacks — just like Lockheed’s F-35.

Additionally, Northrop Grumman is involved in a number of high-price tag defense initiatives, including the $13 billion Sentinel intercontinental ballistic missile (ICBM) program. 

The Sentinel is set to replace the Minuteman missile as our ground-based strategic deterrent (the nuclear missiles hiding in silos throughout the country).

Furthermore, in September, Northrop was selected to continue development on the Glide Phase Interceptor, beating out RTX. That’s a co-production initiative between the U.S. and Japan, led by the Missile Defense Agency (MDA). 

The Pentagon hopes to have the interceptor operational by 2029, have it fully operational by 2032, and to have at least 24 GPI missiles by 2040.

Northrop Grumman has already received $290 million for development with more to come down the line.

Of course, the company is also a major player in more traditional defense projects, like the deal it recently signed to produce ammunition for infantry fighting vehicles in Lithuania.

The total value of that deal is $745 million for all parties involved.

The Bottom Line for Defense Stocks

Global military spending reached $2.44 trillion in 2023. That’s up from $2.2 trillion in 2022. That figure will be even higher this year — and still higher in 2025.

The United States, alone, is set to spend a record $895 on defense in the next year, with a military budget that’s almost certain to top $1 trillion in the next presidential administration — regardless of who wins. 

Russia’s invasion has been wearing on Ukraine for the better part of three years now, and any breakthrough there will only inspire Europe to spend more on defense than it already is — which is a record amount.

Hamas’ attack on Israel triggered a massive regional war that’s now consumed Iran and Lebanon as well. 

And the Pacific is living under the constant shadow of China’s massive defense outlay and inevitable invasion of Taiwan.  

So here we are. It’s a terrifying geopolitical landscape that’s poised to usher in an era of conflict and carnage that will supersede all that came before it.

We can all sit around and fret about it or observe with horror from afar. But as an investor I’ve been loading up on defense stocks for the past decade and I have no intention of stopping. 

So if you want to get the latest on investable defense tech with massive potential check out my latest recommendation here.

Fight on,

Jason Simpkins

Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more…

In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor’s page.

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