Best Defense Stocks To Buy And Watch For Today And The Future

The best defense stocks boast long-term programs as well as footholds in emerging priorities for the U.S. and its allies, amid the Russian invasion of Ukraine.


Russia-Ukraine war Impacts Defense Stocks

Defense stocks surged following Russia’s invasion of Ukraine in February. Many formed new, short bases above longer consolidations. But they’re struggling now along with the broader stock market.

The U.S. has vowed more than $3 billion in military aid to Ukraine. Allies are sending European- and U.S.-built weapons to Ukraine including Lockheed Martin (LMT) Javelin anti-tank missiles and Raytheon (RTX) Stinger air-defense systems.

Longer term, European countries and other allies are signaling big, long-term increases in military spending, suggesting a major upgrade in weapons systems.

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Northrop Grumman Stock

Northrop Grumman (NOC) revenue totaled $35.7 billion in 2021.

Shares of the IBD Leaderboard stock cleared a 477.36 cup-with-handle buy point in early June, according to MarketSmith analysis. But Northrop Grumman stock has now fallen below the entry. It’s testing support at the 10-week moving average but remains well above the 40-week average.

NOC stock has an IBD Composite Rating of 88 and an EPS Rating of 69.

Northrop’s B-21 stealth bomber. (U.S. Air Force)

Northrop makes the B-2 stealth bomber and will make the next-gen B-21 stealth bomber as well. The B-21s could eventually replace B-2s as well as Cold War-era B-52s.

The defense company is a major subcontractor on Lockheed’s F-35 program and also produces drones such as the Global Hawk. Meanwhile, its purchase of Orbital ATK boosted its space offerings.

Notably, Northrop Grumman is developing the U.S. Air Force’s next-gen intercontinental ballistic missile system, now called Sentinel (formerly Ground Based Strategic Deterrent).

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Lockheed Martin Stock

Lockheed Martin generated revenue of $67 billion in 2021.

Shares of Lockheed stock continue to work on a 480.09 flat-base buy point, after a mixed earnings report. LMT stock has undercut the 10-week moving average but remains above the 40-week line. Shares carry a Composite Rating of 90 and an EPS score of 89.

Lockheed Martin F-35
F-35 stealth fighter. (Lockheed Martin)

Lockheed makes the F-22 and F-35 fighter jets. Its F-35 Lightning II program promises to be a key moneymaker for years to come. The stealth fighter will be key to countering Russia and China.

The U.S. and its allies have 3,100 F-35s on order through 2035, making Lockheed one of the best defense stocks for steady, long-term revenue.

And more countries are queuing up. In the wake of Russia’s Ukraine invasion, Germany announced plans to buy 35 F-35s. Canada will buy 88 F-35 jets.

Meanwhile, Lockheed has key hypersonic weapons in the works. Last September, the Hypersonic Air-breathing Weapon Concepts (HAWC) from Lockheed and Raytheon successfully completed carry tests.

For NASA, Lockheed is developing the Orion spacecraft. With Boeing, it makes and operates rockets for launching spacecraft into orbit.

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Raytheon Technologies Stock

Raytheon’s Missiles & Defense business reported 2021 sales of $15.54 billion, almost a quarter of the company’s total revenue. Like Boeing, Raytheon also taps commercial aerospace.

A brief breakout for Raytheon stock past 104.44 in April fizzled. Shares eye a new 106.12 buy point, trading below the 50-day average and testing support at the 200-day line. They earn a Comp Rating of 81 and an EPS score of 70.

Raytheon's Patriot Missile System
Patriot missile defense system. (Raytheon)

Missiles are key to Raytheon’s defense business, making it one of the best defense stocks amid threats from Russia, China, North Korea and Iran.

Raytheon makes the Javelin anti-tank missile and Stinger anti-aircraft missile, both being used in the Russia-Ukraine war. It also builds the Patriot and Tomahawk missiles.

Meanwhile, Raytheon is ramping up in cyberdefense and hypersonic weapons technology.

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General Dynamics Stock

General Dynamics (GD) delivered revenue of $38.5 billion in 2021.

GD stock continues to work on a 255.09 flat-base buy point. Like RTX, General Dynamics shares have undercut the 10-week average and are now testing the 40-week line. They bear a Comp Rating of 79 and an EPS Rating of 64.

M1 Abrams tank. (StockPhotosLV/Shutterstock)

Ships and submarines for the U.S. Navy help to define General Dynamics, making it one of the best defense stocks. GD helped to build Littoral Combat Ships, and it also makes the Virginia- and Columbia-class submarines.

GD also builds Arleigh Burke-class missile destroyers, a type of warship, Zumwalt-class next-generation destroyers. Its NASSCO unit builds  support ships for the Navy.

General Dynamics provides the U.S. Army, too. It builds Abrams tanks, the Stryker family of vehicles, and light armored vehicles.

Meanwhile, its Gulfstream jets target the business customer.

Howmet Stock

Howmet Aerospace (HWM) generated nearly $5 billion in 2021 sales.

HWM stock eyes a 37.76 buy point after making limited progress from an earlier breakout. But shares have fallen below the 10-week average as well as the 40-week counterpart. Howmet stock earns a superior Composite Rating of 91 and an EPS Rating of 75.

The Pittsburgh-based company supplies the Lockheed-made, fifth-generation F-35 stealth fighter jets.

It provides the forged aluminum and titanium bulkheads. Howmet also supplies the titanium for other airframe structures.

To propel the powerful F-35 engine, Howmet supplies superalloy blades and vanes. More broadly in defense, it provides parts for fluid management systems, radars and other defense systems.

In addition, Howmet taps the commercial aerospace market for customers like Boeing (BA). Boeing stock remains below a falling 10-week average and far below the 40-week line, due in part to commercial aviation woes.

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IBD offers a broad range of growth stock lists, such as Leaderboard. Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.


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