The geopolitical climate is changing. The Russian invasion of Ukraine is the most extreme example of these changes, but it’s also just one of them. The reality is that as the geopolitical tides continue to grow choppy, spending on defense technologies is likely to grow.
That means that while a changing geopolitical landscape may be a scary thing in some ways, it’s also an open door to opportunity for investors.
Knowing that we’re likely to see increased spending in the defense technology sector, it only makes sense to look to the sector for strong investment opportunities. Below, you’ll find the details on five defense technologies companies to watch closely and where each of them shines.
Lockheed Martin Corp (NYSE: LMT): Best Diversified Defense Technologies Stock
You can’t write an article about defense technologies without mentioning Lockheed Martin Corp. The company is one of the largest aerospace and defense companies in the world with a diverse portfolio of defense and other technologies to offer the United States government and aerospace industry.
The company operates four business segments. Those include aeronautics, missiles and fire control, rotary and mission systems, and space – and has taken a leadership role in each of these four industries. The company also has partnerships, like a recently expanded partnership with Microsoft, to produce better technologies for their government clients.
All told, LMT is a leader in its industry, produces meaningful revenue and profitability, and offers meaningful dividends. That combined with the recent declines in the stock point to a strong opportunity to benefit from a potential rebound.
Mercury Systems Inc (NASDAQ: MRCY): Best Diversified Aerospace Defense Technologies Stock
Mercury Systems is all about aerospace technologies, both on the commercial and defense front. That’s important because while the defense sector offers stable growth, the company will also benefit as the commercial flight industry works to rebound.
However, the core of the company may not be why you decide to dive in here.
In January, Mercury Systems announced that it was exploring strategic alternatives. Of course, one of those strategic alternatives is the sale of the company, and there have been interested buyers and bids, one of which came from Veritas Capital.
If the company were to be acquired, it would likely happen at a strong premium, resulting in a meaningful return of value for investors.
Breeze Holdings Acquisition Corp. (Nasdaq: BREZ): Best Ammunition Technology Stock
Breeze Holdings Acquisition Corp. is a SPAC. The company has plenty of access to capital to make big moves and a management team that knows what it’s doing. But the real prize is the company’s acquisition target.
Breeze Holdings Acquisition Corp. is expected to close a deal with TV Ammo (True Velocity Ammo) no later than September of this year. That’s exciting news because True Velocity is working to upgrade ammunition technology – crucial weapons technology that hasn’t seen a meaningful change since 175 years ago.
TV Ammo has developed composite-cartridge ammunition that reduces the weight of ammunition by 30% to 32%. With soldiers carrying up to 180 pounds of ammunition into a war zone, that’s a meaningful difference that has the potential to save countless lives.
With the closing of the deal between BREZ and TV Ammo being just around the corner, this stock should be on your watchlist.
Heico Corp (NYSE: HEI): Best for Reduced Cost Aerospace Maintenance
Heico Corp operates in the aerospace sector. The company’s defense arm, HEICO DEFENSE works with the military to supply aircraft engines and components, batteries, and insulation products. It also assists in reverse engineering, reverse manufacturing, and repair and return services.
Importantly, Heico focuses on reducing the cost of fleet operation and maintenance, which plays a significant role in the other arm of its business – the commercial arm.
Although Heico is a prime provider to the United States government, it also works with a wide range of commercial aerospace companies, setting the stage for further growth as the commercial industry rebounds.
AeroVironment, Inc. (Nasdaq: AVAV): Best Unmanned Aircraft Play
AeroVironment is a diversified defense contractor, but much of its business comes from its Unmanned Aircraft, or drone, arm. The company offers a wide range of military drones designed for a wide range of applications.
Outside of its drone business, AeroVironment also produces unmanned ground vehicles, tactical missile systems, high-altitude pseudo-satellites, and service and support solutions.
Analysts love the stock too.
At the moment, three analysts are weighing in on the stock, two of whom rate it a strong buy and one who rates it a buy. The average price target is $120, suggesting the stock has room for double-digit growth.
Final Thoughts
The defense sector is likely to see significant spending growth. Consider the stocks above as you look for opportunities to take advantage of this growth in spreading ahead.
Article Resources
- https://finance.yahoo.com/quote/lmt
- https://www.lockheedmartin.com/en-us/index.html
- https://finance.yahoo.com/quote/mrcy
- https://www.mrcy.com/
- https://finance.yahoo.com/quote/brez
- https://www.tvammo.com/
- https://discoverthedinosaurs.com/how-much-ammo-does-a-soldier-carry/
- https://finance.yahoo.com/quote/hei
- https://www.heico.com/
- https://finance.yahoo.com/quote/avav
- https://finance.yahoo.com/quote/avav
- https://www.wallstreetzen.com/stocks/us/nasdaq/avav/stock-forecast#:~:text=The%20consensus%20among%203%20Wall,to%20Strong%20Buy%20AVAV%20stock.
Disclosure: CNA Finance is not an investment advisor or broker-dealer. This article is not a solicitation to buy or sell any security and was designed for information purposes only. This article was written by Joshua Rodriguez and shares his true opinion, which may not be the opinion of the publication it appears on. Joshua Rodriguez holds no positions in any security mentioned herein and has no intentions of opening positions within the next 72 hours. This publication was sponsored by Global Advertising Agency and should not be considered investment advice. Trading and investing in stocks involve risk. CNA Finance suggests you speak with your personal financial advisor or investment advisor before making any investment decisions.