In an era marked by geopolitical tensions and shifting alliances, the defense sector has emerged as a focal point for investors seeking returns. The resurgence in military spending, driven by conflicts and strategic realignments, has propelled several public defense companies into the spotlight lately. Just for reference, governments’ spendings around the globe reached the highest levels since the end of the Cold War last year.
Lockheed Martin (NYSE: LMT) continues to be a cornerstone in the defense industry, primarily due to its F-35 fighter jets. With $71 billion US dollars in revenues as of 2024 FY, the company has secured significant contracts, including a recent deal with Australia for the Air 6500 program, enhancing its integrated defense systems capabilities.
BAE Systems (LSE: BA), the UK’s largest defense contractor, has reported around 230% total return over five years. The company has secured substantial orders, such as a £3.95 billion contract for nuclear-powered submarines and a £4 billion air defense system deal with Poland. BAE’s strategic acquisitions, like the $5.6 billion purchase of Ball Aerospace, have expanded its footprint into new markets, including space technologies.
Elbit Systems (NASDAQ: ESLT), an Israeli defense electronics company, is gaining attention for its advanced missile defense technologies. The company’s innovations, including airplane-based, laser-powered missile defense systems, are anticipated to meet the increasing demand for cost-effective and efficient defense solutions.
Leidos Holdings (NYSE: LDOS) has experienced an over 50% surge in its stock over the past five years. With a backlog of $36.6 billion, the company has secured significant contracts, such as a $738 million deal with the US Air Force for cybersecurity and IT support, underscoring its pivotal role in modern defense operations.
L3Harris Technologies (NYSE: LHX), formed through the merger of several US defense contractors, specializes in electronics, such as command control systems and even gadgets like night-vision goggles. The company’s recent acquisition of Aerojet expands its capabilities in missile defense, positioning it for sustained growth in the defense sector.
RTX Corporation (NYSE: RTX), formerly Raytheon Technologies, boasts a strong portfolio in aerospace and defense, with military sales accounting for over 50% of its revenues. Despite challenges with its Geared TurboFan engines, the company maintains a substantial backlog for key defense franchises like the F-35 aircraft engine and Patriot missiles, indicating robust future demand.
AeroVironment Inc (NASDAQ: AVAV), a leader in unmanned aerial vehicles, has become the U.S. military’s top supplier of small drones. With its Switchblade drones seeing extensive use in Ukraine’s conflict, the company is well-positioned to benefit from the increasing reliance on drone technology in modern warfare.
