The best defense stocks boast long-term programs as well as footholds in emerging priorities for the U.S. and its allies, while the Russia-Ukraine war drags on.


Russia-Ukraine War Impacts Defense Stocks

Defense stocks surged following Russia’s invasion of Ukraine in February 2022. As that war persists and a nuclear threat grows, defense stocks are outperforming the broader stock market.

“Defense stocks including “NOC, LMT and RTX are very well-positioned to benefit from increased funding associated with nuclear missiles,” said Ken Herbert, analyst at RBC Capital, in a September 2022 note.

The U.S. and its European allies are spending billions in military aid for Ukraine. They are sending weapons such as the Lockheed Martin (LMT) Javelin anti-tank missiles and Raytheon (RTX) Stinger air-defense systems.

Longer term, the Ukraine war could mean big increases in military spending as well.

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BA Stock

Boeing (BA) is known for its commercial jets and it’s also a major player in the defense sector. Defense revenue totaled $26.54 billion in 2021, roughly 43% of Boeing’s overall revenue.

BA stock earns an IBD Composite Rating of 63, EPS Rating of 1 and RS Rating of 97, all out of a best-possible 99.

The relative strength line for this top defense stock has risen since October 2022 to a new high, according to MarketSmith analysis. A strong RS line shows a stock is outperforming the S&P 500 index. The rally for Boeing stock came after it forecast rising jet deliveries as commercial air travel recovers from the pandemic.

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

In defense, Boeing makes the iconic B-52 bomber. Its legacy fighter jets, like the F/A-18 and F-15,  have updates in the works.

Boeing is also building the T-7 Red Hawk trainer jets, the MQ-25 Stingray drone and the KC-46 tanker for the Air Force and Navy. Its P-8 Poseidon spy aircraft is proving popular with both the U.S. Navy and allied navies.

In the space realm, Boeing is building the Crew Space Transportation-100 Starliner, to ferry astronauts, as well as NASA’s Space Launch System, the most powerful rocket ever.

Both projects have seen major delays. By contrast, rival SpaceX has already sent up multiple operational crewed flights to the ISS.

Boeing’s EPS Rating is weighed down by recent challenges, tied in large part to its commercial division.

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RTX Stock

The Raytheon Missiles and Defense segment reported 2021 sales of $15.54 billion, almost a quarter of Raytheon Technologies‘ (RTX) overall revenue for the year.  Like Boeing, Raytheon taps both military defense and commercial aviation.

RTX stock carries a Composite Rating of 78, EPS score of 48 and RS Rating of 87.

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

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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HWM Stock

Howmet Aerospace (HWM) generated nearly $5 billion in 2021 sales. HWM stock bears a Comp Rating of 96, EPS Rating of 77 and RS Rating of 93.

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 Aerospace 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.

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TXT Stock

Textron (TXT), maker of Bell helicopters and Cessnal business jets, generated $12.4 billion in 2021 sales. TXT stock earns a Composite Rating of 84, EPS Rating of 82 and RS Rating of 84.

In December 2022, the U.S. Army announced that Bell Textron’s V-280 Valor tilt-rotor has won its Future Long-Range Assault Aircraft (FLRAA) competition, to succeed the aging UH-60 Black Hawk helicopter.

The announcement followed years of development, prototyping and test flights. The announced deal is worth up to $1.3 billion with the initial obligation valued at $232 million over the next 18 months.

Lockheed Martin’s Sikorsky, maker of the Black Hawk, and teammate Boeing have formally protested the Army’s selection of Textron’s Valor over their own Defiant.

Textron started as a small textile company in 1923. Today, the Providence-based firm has grown into a successful multi-industry business, with a presence in more than 25 countries.

HXL Stock

Hexcel (HXL) generated $1.3 billion in 2021 sales. HXL stock bears a Comp Rating of 92, EPS Rating of 78 and RS Rating of 89.

The aerospace and defense contractor has seen its RS line rise steadily over the past year to a new high.

Based in Stamford, Conn.-based, Hexcel supplies adhesives and composites for more than 100 military aircraft and space programs. Those include the Lockheed Martin F-35, the Boeing Hornet and the Eurofighter Typhoon.

Hexcel also supplies commercial aircraft like the Boeing 737 Max and 787 Dreamliner. It is a leader in producing advanced composites for helicopter blades, including carbon fiber.

In space applications, advanced composites are used for rocket booster cases and payload doors for launch vehicles, the company says. They also include solar arrays for military and commercial satellites.

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