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6 Defense Stocks to Buy During Rising Geopolitical Tensions

Updated: Nov 14, 2019

With rising global tensions, the defense industry offers some of the best stocks to buy:

- Lockheed Martin (LMT)

Several factors support the robust lift in Lockheed Martin (NYSE:LMT) shares this year. But one of those factors is that among defense stocks, Lockheed Martin represents the military’s front face. Most folks are familiar with the company’s F-35 Lightning II. However, Lockheed is the backbone for America’s squadrons of fighter jets, bombers, and multi-functional aircraft.

At this stage, many may feel it’s vital for the U.S. to show some muscle, which in turn benefits LMT stock. First, the U.S. has lost significant credibility on the world stage.

Our sudden weakness in foreign policy isn’t without consequences. Surely, it has inspired Russia to throw its weight around, realizing the penalties for belligerence is minimal. Thus, I like LMT stock to rise higher.

- Northrop Grumman (NOC)

Although seemingly less celebrated than Lockheed Martin in the public space, Northrop Grumman (NYSE:NOC) is no lightweight. In fact, Northrop is one of the most critical defense stocks to buy due to its highly guarded proprietary technologies. That attribute will play a key role, especially in this atmosphere.

One of the reasons why I like NOC stock for the long haul is its upcoming B-21 Raider stealth bomber jet. According to the company’s information, the B-21 can penetrate the toughest air defenses and strike targets anywhere in the world. The idea that a precision payload can arrive at someone’s doorsteps should be a significant deterrent.

Ultimately, that’s a net positive for NOC stock.

- Boeing (BA)

It’s easy to forget that Boeing (NYSE:BA) is actually one of the best stocks to buy in the defense industry. Right now, the main focus is how the company will navigate the minefield that is the Boeing 737 Max jetliner. After two fatal crashes linked to the aircraft’s faulty software, BA stock took a beating.

But with each passing day, the controversy fades slightly more into the background. Eventually, like most controversies involving publicly traded companies, the 737 Max will become a footnote. Right now, though, BA stock is an undervalued play in the defense sector.

In addition to the B-1B Lancer, Boeing manufacturers the F-15 and F/A-18 Super Hornet, which the Air Force and Navy deploys, respectively. Although these two fighter jets don’t generate headlines like the advanced F-35, they’re considerably cheaper. If we dive further into a conflict, resources will be limited.

- Raytheon (RTN)

A key reason why no nation has attacked the U.S. in modern times is its ability to respond from anywhere. Among defense stocks, that attribute is no more emblematic than in shares of Raytheon (NYSE:RTN).

Famous for the Tomahawk cruise missile, Raytheon leads in offensive weapons capabilities.

However, so much has changed in the military space since the Tomahawk came out. With our adversaries making significant progress in electronic warfare, it’s imperative that Raytheon also take the lead in defensive technologies. They’re doing exactly that with their Next Generation Jammer Mid-Band, or NGJ MB.

When it becomes operational in 2022, the NGJ MB will allow our aircraft to fly deeper into enemy territory. This allows our forces to establish air superiority, deliver weapons payloads, and support the troops on the ground.

Raytheon’s comprehensive approach to defense makes RTN stock an easy buy.

- Kratos Defense & Security Solutions (KTOS)

Iran’s downing of an American military drone — with conflicting reports about where it happened — may well go down as the catalyst for a new Middle Eastern conflict.

But in the future, this embarrassing incident may become a relic of a bygone era. That’s because companies like Kratos Defense & Security Solutions (NASDAQ:KTOS) are developing the next wave of advanced drones. Unlike prior iterations, these drones will carry offensive payloads: in other words, they have the ability to punch back, deterring any shenanigans.

What will drive KTOS stock higher is the company’s XQ-58 Valkyrie. Small and nimble, the Valkyrie can carry a 550-pound payload. Better yet, they’re designed with economy in mind. Therefore, these drones can achieve air superiority with minimal cost and no loss of life (for our service members).

- Leidos (LDOS)

Currently, most defense stocks are kinetic. What I mean is that their underlying “products” deliver brute-force impact on both hard and soft targets. From a purely guttural level, nothing gets the point across more than a kinetic response.

However, the warfare of tomorrow will increasingly shift toward the digital realm. This is actually a more sinister pathway, allowing military forces to conquer societies without leveling infrastructures; thus, they can use said infrastructures for their own good. It’s a terrifying scenario, one that Leidos (NYSE:LDOS) helps to ensure we stay on the right side of.

Simply from a technical point of view, LDOS stock is one of the best stocks to buy anywhere. On a year-to-date basis, Leidos shares have gained over 50%. More impressively, the ride up is almost linear.

So what makes LDOS stock so compelling? Leidos has many specialties, including cybersecurity. Cyberwarfare represents one of the easiest ways for our enemies to wreak havoc. To prevent this, Leidos deploys next-generation threat assessment and response measures.

Credit: BusinessInsider. The Wall Street Journal

© De Angelis & Associates 2019. All Rights Reserved.


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