Arm your portfolio with these three defence picks

As the U.S. and its traditional allies around the world beef up military capabilities, these defence contractors and arms manufacturers are scaling up production to meet soaring demand

Vikram Barhat 13 February, 2019 | 1:00PM

U.S. President Donald Trump recently did a U-turn on the decision to cut defence spending for 2019 and agreed to instead boost military budget from US$716 billion to as much as US$750 billion, according to Reuters. The 4.7% higher than expected spending could provide a significant boost for leading U.S. aerospace and defence companies, which hold the lion’s share of the global arms market.

Going by these numbers, and the expectation that a conspiracy of factors will continue to drive global defense sector growth in 2019 and beyond, it’s reasonable to infer that U.S. arms suppliers are well positioned to profit from the increased spending on military products and services. American defence firms are the unchallenged leaders of the US$398 billion global arms industry, according to a recent report by the Stockholm International Peace Research Institute (SIPRI). Of the top 100 military services companies, or SIPRI Top 100, 42 companies were based in the United States.

As the U.S. and its traditional allies around the world beef up their military capabilities, world’s largest defence contractors and arms manufacturers are scaling up production to meet soaring demand. With a strong tailwind for long-term growth, undeniable competitive edge, and undervalued stock prices, these companies could be attractive targets for those investing for the long haul and looking to hedge against geopolitical adventurism, according to Morningstar equity research.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
General Dynamics Corp138.57 USD-0.07
Lockheed Martin Corp369.00 USD0.05
Raytheon Co  

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.