Has anyone noticed the defense stocks getting bludgeoned in the past few weeks? With all the military aid provided to Ukraine and the drumbeat in the Taiwan Straits getting louder and louder, and now Canada and India are in a tiff, why are the defense contractors falling like dominoes?
In the past two months, Boeing and Lockheed Martin are down double digits. Northrup Grumman is down 20% from last year. Raytheon, now known as “RTX Corp,” is off over 30% in just six months. The best of the bunch is General Dynamics, which has dropped over a dozen percent this year. Those are some pretty big thuds.
So what in the name of Dick Cheney is going on here? These companies are money printing presses with production backlogs years out. Reports are circulating that Russia is destroying weapons faster than our guys can produce them, which logic says should have them making bank, right?
It’s not like America’s endless wars will stop any time soon. Washington has found them to be quite profitable. Of the ten wealthiest counties in the U.S., four are around D.C., and the defense industry, with pharmaceuticals, are two of the top reasons why.
So, given the present global environment, why have defense stocks turned ugly? It’s a head-scratcher and has us on the lookout for them to find a floor and provide some upside opportunity.
The views expressed represent the opinion of Good Life Asset Strategies, LLC. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness.
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