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5 Defense Stocks You Should Buy Now

Lockheed Martin F-35A Lightning II MM7360 fighter jet at Zeltweg Air Base.

When stocks fall, the knee-jerk reaction is often to cut your losses and sell. But many stock market experts — including a man by the name of Warren Buffett (you may have heard of him) — warn against this play-it-safe strategy. In fact, they view market dips as opportunities. 

“Look at market fluctuations as your friend rather than your enemy,” Buffett said. 

If you hold a significant portion of your assets in stocks, it’s understandable that a large dip in the market would make you nervous. But realize that while a bear market is scary in the short term, it usually doesn’t last long. The Balance examined the United States’ history of bear markets and determined that they last an average of 22 months, and bounce back stronger than before. 

While Congress debates on a relief bill to the tune of $1.8 trillion, you should be considering your next market moves. Aside from leaving your current stocks alone to recover, think about potential new investments. In many respects, this is the worst crisis since the Great Recession, but it could also be the opportunity of a lifetime. 

Here are 6 defense stocks you should buy now while the buying’s good. All stock prices and market caps were sourced at close on March 23, 2020. 

 

5 Defense Stocks You Should Buy Now

5. Raytheon (RTN)

  • Market cap: $32.2 billion
  • Stock price: $115.54

Raytheon is a major U.S defense manufacturer that primarily builds military-grade weapons and electronics. The company reported 6.5% revenue growth in quarter four of 2019, representing the fifth consecutive quarter of growth in the high single digits. 

While it’s not as established as other names on this list, its upcoming merger with United Technologies signals its entry into the commercial aerospace industry. This translates to lots of investors selling stock now, and a good buy-in opportunity if you’re interested in seeing long-term growth. 


4. Northrop Grumman (NOC)

  • Market cap: $45.2 billion
  • Stock price: $269.86

Glocal security firm Northrop Grumman has a solid foundation of big contracts with the Air Force, U.S. Defense Department, and Navy for various nuclear weapons, embedded GPS navigation systems, and advanced aircraft. In addition, it won’t be impacted as directly by the coronavirus as pure aircraft manufacturers are. 

Defense is essential to the U.S. government, so the hit to Northrop Grumman’s stocks as a result of the overall market downturn could signal a great investment for the future.


3. General Dynamics (GD)

  • Market cap: $30.9 billion
  • Stock price: $106.60

This aerospace company has about half the market cap of Boeing, but has held up better so far — with stocks only falling 33%, as compared to Boeing’s colossal 70% drop. GD also has a solid base of defense contracts in addition to its commercial jet business, and has manufactured the majority of the U.S.’s nuclear submarines.

Though GD is smaller and less established than Boeing, The Motley Fool recently rated them as a better buy-in, largely because of Boeing’s recent commercial failures. 


2. Lockheed Martin (LMT)

  • Market cap: $78 billion
  • Stock price: $276.80

Lockheed Martin is an American global aerospace, defense, security, and advanced technologies company, probably best known for aircraft like the F-35 and its collab with General Dynamics on the F-16 Fighting Falcon. But what’s most telling is that the company has a backlog of over $144 billion in revenue; injecting some much-needed certainty into an uncertain market.


1. Boeing (BA)

  • Market cap: $59.6 billion
  • Stock price: $105.62

Boeing is by far the largest commercial airline manufacturer in the U.S. In addition, $26.2 million of their 2019 revenue came from U.S. defense spending. While airline stock has been plummeting in the midst of a global health pandemic that’s grounded pretty much all of us, you should expect to see Boeing pull through. 

In fact, Boeing shares recently rose 11% after Goldman Sachs predicted that the company would survive the crisis. And more than that, the U.S. is currently in a period of record growth for defense spending. Even in a recession, the government will always have some need for military aircraft. So if you’re looking for a “lucrative, but fairly safe” investment during all of this, Boeing is probably it. 

 

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