The best defense stocks for today – and the future

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The best defense stocks have both long-term programs and a foothold in emerging priorities for the US and its allies amid Russia’s invasion of Ukraine.




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Russia-Ukraine War Affects Defense Stocks

Defense stocks rose after the Russian invasion of Ukraine in February. They are now grappling with the broader stock market.

The US and its European allies are spending billions on military aid to Ukraine. They send weapons like the Lockheed Martin (LMT) Javelin anti-tank missiles and Raytheon (RTX) Stinger air defense systems.

In the longer term, the war in Ukraine could also lead to major increases in military spending.


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Northrop Grumman Stock

Northrop Grumman (NOC) revenue was $35.67 billion in 2021.

Shares of the IBD Leaderboard stock broke to highs in early June and then collapsed. NOC shares have formed a new double bottom base with a buy point of 487.99. It was 2% below the August 5 entry but above the support at the 10-week moving average. The rising relative strength line for Northrop stocks is not far from highs, according to MarketSmith’s analysis.

NOC stocks have an IBD Composite Rating of 90 and an EPS Rating of 72.

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

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

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

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In addition, Northrop Grumman is developing the United States Air Force’s next-generation intercontinental ballistic missile system, Sentinel.


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Lockheed Martin stock

Lockheed Martin generated revenue of $67 billion in 2021.

Lockheed stocks jumped in early August to regain the 10-week average, after regaining the 40-week line in late July. The RS line for LMT stocks has risen this year and continues just below the highs. Stocks have a Composite Rating of 89 and an EPS Score of 81.

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

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

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

And more countries are lining up. After the Russian invasion of Ukraine, Germany and Canada announced plans to buy dozens of F-35s.

Meanwhile, Lockheed has major hypersonic weapons in the works. Lockheed is developing the Orion spacecraft for NASA. Together with Boeing, it makes and operates rockets to launch spacecraft into orbit.


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Raytheon Technologies Stock

Raytheon’s Missiles & Defense business reported revenue of $15.54 billion in 2021, nearly a quarter of the company’s total revenue. Like Boeing (BA), Raytheon uses both military and commercial aerospace.

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Shares continue to operate at a buy point of 106.12. Raytheon stocks are 12% below entry, between the 10-week and 40-week averages. It earns a Comp Rating of 73 and an EPS Score of 62.

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 supplies amid threats from Russia, China, North Korea and Iran.

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

Meanwhile, Raytheon is working on cyber defense and hypersonic weapons technology.


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Elbit Systems Stock

Elbit systems (ESLT) generated revenue of $17.05 billion in 2021.

The stock reached a buying point of 232.86 with handle. Elbit stocks have a Comp Rating of 91 and an EPS Rating of 57.

Founded in 1996, the Israeli company develops and supplies a broad portfolio of air, land and naval systems for military and commercial aviation. Those include Unmanned Aircraft Systems (UAS), which it describes as the backbone of the Israel Defense Forces.

Together, Israel, the US and Canada account for more than half of Elbit Systems’ sales.

Howmet stock

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

The HWM stock briefly reached a buying point of 37.76 in early August. But the shares are now under the entry. Howmet stocks are well above the 10-week average and 40-week lines. Howmet stocks earn a superior Composite Rating of 96 and an EPS rating of 77.

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

It supplies the forged aluminum and titanium baffles. Howmet also supplies the titanium for other hull structures.

To propel the powerful F-35 engine, Howmet supplies super alloy blades and blades. More broadly in defense, it supplies components for fluid management systems, radars and other defense systems.

In addition, Howmet taps into the commercial aerospace market for clients such as: Boeing (BA). Boeing shares remain below a declining 10-week average and well below the 40-week line, due in part to commercial aviation issues.

Boeing shares rise sharply after reaching an important milestone. It’s back above the 10-week line, but there’s no good entry for now.

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