Defense stocks belong to the companies that are involved with the defense of the country. They mostly generate their revenues from government bodies like the Pentagon and other intelligence agencies. In addition to the companies that manufacture military equipment, small companies that provide the IT infrastructure and consulting and analytics services to the government also constitute defense stocks.
In recent times, the defense stocks have been rallying up. From 2014 to 2019, the SPADE Defense Index, the index for defense stocks, has doubled up. The defense stocks have benefited due to increased spending by the government on defense measures.
|AAXN||Axon Enterprise, Inc.||#N/A||#N/A||#N/A|
|AIRI||Air Industries Group||$1.07||11.46%||34.0M|
|BA||The Boeing Company||$205.85||38.96%||120.6B|
|BWXT||BWX Technologies, Inc.||$56.15||4.52%||5.3B|
|CODA||Coda Octopus Group, Inc.||$8.46||43.39%||91.9M|
|CVU||CPI Aerostructures, Inc.||$3.04||32.75%||37.2M|
|ESLT||Elbit Systems Ltd.||$156.94||38.58%||6.9B|
|GD||General Dynamics Corporation||$203.44||53.62%||56.9B|
|HII||Huntington Ingalls Industries, Inc.||$201.93||42.75%||8.1B|
|ISSC||Innovative Solutions and Support, Inc.||$6.74||11.40%||116.2M|
|LMT||Lockheed Martin Corporation||$325.34||-7.27%||90.1B|
|NPK||National Presto Industries, Inc.||$82.30||-0.97%||579.2M|
|RGR||Sturm, Ruger & Company, Inc.||$77.88||18.94%||1.4B|
|SPR||Spirit AeroSystems Holdings, Inc.||$41.40||128.22%||4.4B|
|TATT||TAT Technologies Ltd.||$6.31||49.88%||56.0M|
|TDG||TransDigm Group Incorporated||$629.04||37.30%||34.7B|
|TGI||Triumph Group, Inc.||$19.68||211.89%||1.3B|
|AJRD||Aerojet Rocketdyne Holdings, Inc.||$44.18||31.45%||3.5B|
|NOC||Northrop Grumman Corporation||$362.50||23.44%||58.0B|
|RADA||RADA Electronic Industries Ltd.||$10.27||68.36%||505.8M|
Factors to Consider Before Investing in Defense Stocks
Investors must consider that defense stocks function differently from other stocks. They belong to companies that cater exclusively to the government agencies, and their revenues and growth are directly correlated to government spending.
Thus, defense stocks are mostly unaffected by the movement in the stock market or the overall economy. Investors must understand government policies around purchasing before investing in defense stocks.
Additionally, investors must look at the fundamentals of the defense companies, including revenues, earnings, P/E ratios, and valuations. Even when the fundamental parameters are not up to the mark, investors should look at the reasons behind underperformance to find out the best opportunities to invest.
Which Defense Stocks Should I Buy?
Defense stocks perform and behave differently from the stocks of commercial companies. The number of defense stocks is limited as the sector has high barriers to entry. We have compiled a list of the top defense stocks for you to choose from.
Defense stocks are not suitable for all investors. One must invest in defense stocks only if they are comfortable putting their money into an unusual sector. Defense stocks are stable and generate high rewards; however, they are also affected by high profile risks of being involved with the top government agencies.