The Russian invasion and the impact on military stocks

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By Jacob Maslow

Russia invaded Ukraine on 24 February 2022. It was an unprecedented event that shook the world and probably the dumbest decision from Putin. As the civilized world was quick to stand by Ukraine’s side, they also provided military aid. These events can and will affect military stocks. In this article, we will try to discuss how the Russian invasion of Ukraine could boost some of the military stocks.

Military stocks specifics – why are they different from other sectors

When it comes to military companies, game rules are different. Since most of them heavily rely on government contracts, military companies depend on government policies.  Often governments will launch a contract and whoever offers the best solution to the tasks gets the contract. This makes the military industry very competitive. The primary resources needed for these companies are spent on research and development, and researching new technologies for military purposes is probably one of the most expensive tasks. It takes years to develop appropriately working warplanes and other weapons. Some projects are so expensive that they almost cost more than a small country’s budget. For example, Georgia, a small country near Turkey and Azerbaijan, has a budget of approximately 4.4 billion dollars, while the projected cost of the B-2 bomber was 44.75 billion dollars.

But, there are costs related to military equipment and the time needed to develop one. Advanced military jets take decades to develop, and they have to maintain secrecy not to fall into the hands of adversaries or terrorists. Considering the Russian KGB’s strength, developing new technologies in secret becomes a challenge. Let’s continue with the top military companies themselves.

World’s top military companies

World’s most powerful military might, the USA, also has the most advanced research and development contractors in the military field. Most famous military corporations include

  • Northrop Grumman Corp
  • Lockheed Martin
  • Boeing

Northrop Grumman developed the famous B-2 spirit project. Each of these projects costs billions of dollars, so all the corporations here are whales compared to other companies. Northrop Grumman’s other essential projects include B-21 Raider, x-47B, etc. With their partners, they won the Collier trophy eight times.  Lockheed Martin’s F-35 Lightning II doesn’t need any introduction, and Boeing, well, the reader already knows about this giant.

For more details, you can check top military stocks for 2023 to see which are performing best. After knowing which are major suppliers for the US and other powerful countries, it will become easier to track the right stocks. These companies’ stocks have the highest potential to profit in 2023 as the US will need more weapons and vehicles after sending weapons to Ukraine from the current stash.

How the Russian invasion can affect military stocks

After Russia started this meaningless war, every developed country quickly stood by Ukraine’s side. The USA has sent billions of dollars worth of military equipment to brave Ukrainian soldiers. Many countries that sent military aid to Ukraine got new replacements from the west. Since the west is depleting its military resources quickly as they send all relatively old equipment and weapons to Ukraine, this will make them buy more new weaponry and military supplies. Since newer generation missiles and other weapons cost more than older ones, top manufacturers will generate more revenue and develop even more equipment. It is a positive correlation between wars and defense stock prices. Modern military projects cost more than some countries’ budgets. This will increase the revenue of all top military contractor corporations—increased revenue results in increased stock prices. Readers should analyze and monitor every top military corporation’s stocks. Make sure you track their revenues and how they change during military conflict times.

So, what are the stocks to watch closely?

  • Lockheed Martin (LMT) – manufacturer of HIMARS, F-35 Lightning, etc. HIMARS makes this stock super interesting to watch.
  • Raytheon technologies (RTX) – one of the top defense contractors worldwide.
  • Northrop Grumman (NOC) – famous for B2 and, recently B-21 Raider projects.

Any company producing ammunition for weapons systems sent to Ukraine is going to score the highest gains in 2023. HIMARS, for example, almost won the war against Russia single-handedly.

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