Defense stocks will be in the spotlight on Friday and in the coming days as investors focus on the ongoing crisis in the Middle East where Israel attacked Iran’s nuclear sites.
This attack’s severity means that Iran’s response will be brutal and possibly lead to a prolonged war that draws other countries, especially the United States. As a result, companies in the Military Industrial Complex (MIC) will likely benefit from this crisis.
The situation is notable because Trump has been negotiating a truce with Iran, and is still holding talks with Russia. A peace deal in the two regions would likely impact these defense shares.
Top defense stocks to buy
Many companies in the defense sector may benefit from the ongoing crisis. The most notable of them are Lockheed Martin (LMT), Northrop Grumman (NOC), and General Dynamics.
Lockheed Martin Corporation (LMT)
LMT is the second-biggest company in the military-industrial complex that will benefit from this crisis. This explains why its stock jumped by over 4% in the premarket session.
Lockheed is a juggernaut that manufactures many components used across all areas in the defense industry. Its aeronautics business includes the likes of F-35 Lightning, F-16 Fighting Falcon, and F-22 Raptor.
The company also manufactures missiles, including the Javelin, Joint Air-to-Ground Missile (JGM), and Joint Air-to-Surface Standoff Missile (JASSM), and others.
Lockheed Martin also makes rotary and mission systems, including the Sirkosky Black Hawk, Aegis Combat System, and S-92 helicopter. It is also involved in the space industry, meaning that it will benefit from Trump’s Golden Dome project.
Lockheed Martin stock price has underperformed the market in the past few months. It has risen by 0.77% in the last three months and by 4% in the last 12 months. It remains much lower than the last 12-month high of $598.
Therefore, the LMT stock will likely do well in the next few weeks as the crisis in the Middle East will escalate.
The most recent results showed that Lockheed Martin’s revenue rose by 4% in the first quarter to $18 billion, while its net earnings rose to $1.7 billion. It returned $1.5 billion to shareholders through dividends and buybacks.
Northrop Grumman (NOC)
Northrop Grumman is another top defense stock to buy after the crisis started. The company, like Lockheed, is involved in areas like land, sea, space, and air.
Its aeronautical business makes products like B-2 Spirit, B-21 Raider, and E-2D Advanced Hawkeye. The company also makes rocket motors, advanced anti-radiation guided missiles, ground-based strategic deterrent, and airborne reconnaissance surveillance system.
Northrop Grumman’s products will likely be used if the Iran and Israel crisis escalates.
The most recent results showed that Northrop Grumman’s new awards rose to $10.8 billion, giving it a new order backlog of $92.8 billion. Its revenue of $9.46 billion was 7% lower than the same quarter last year. Net earnings plunged by 49% to $481 million. NOC stock price has jumped by 17% in the last 12 months.
Read more: Why are analysts turning bullish on Northrop Grumman?
General Dynamics (GD)
General Dynamics is another defense stock that could benefit from the ongoing crisis in the Middle East. It is the fifth biggest defense contractor, focusing on combat systems, munitions and weapons, and marine systems. It also manufactures aerospace systems, including the popular Gulfstream Business Jet
Some of the most popular products that may be used in the Israeli and Iranian conflict are Abrams tank, Stryker Combat vehicles, and 155 millimeter ammunition. The stock will likely benefit from the ongoing crisis.
The other companies that may benefit are RTX, Huntington Ingalls Industries, Leidos, and Amentum.
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