Soaring Global Military Expenditure Boosts LMT and RTX Stocks
Military expenditures are on the rise, and I have a preference: Lockheed Martin over RTX.
I've been eyeing Lockheed Martin (LMT) and Raytheon Technologies (RTX) again, more than a year since my last write-up in March 2024. If you're in the loop with our style, we shoot straight with actionable investment ideas from our independent research. If you fancy this approach, do check out Envision Early Retirement. They pump out at least 1x detailed articles per week on hot topics like these.
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Global military spending surged to an astonishing $2.718 trillion in 2024, recording a 9.4% rise from 2023—the greatest year-on-year increase since the end of the Cold War[1][3][5]. The primary drivers for this hike were increased spending across all regions, especially in Europe and the Middle East, where regional conflicts like the Ukraine war played a significant role[3][4]. The top five military spenders—the US, China, Russia, Germany, and India—together accounted for 60% of global military spending, with a combined total of $1.635 trillion[1][3].
This escalation in military spending can be beneficial for defense stocks such as LMT and RTX, as governments prioritize military security and invest more in defense technologies.
Lockheed Martin (LMT)
Increased military spending benefits Lockheed Martin, a significant defense contractor, particularly in sectors like advanced aircraft and missile systems. Given its position as a leading supplier of defense equipment, including the coveted F-35 fighter jets, Lockheed Martin is poised to ride the surge in military expenditure.
Raytheon Technologies (RTX)
Raytheon Technologies, with its diverse portfolio of defense and aerospace products, is likely to thrive as a result of increased spending in both military and civilian markets. RTX's commitment to innovation and upgrading defense systems resonates strongly with the heightened demand for advanced technology brought about by geopolitical tensions.
The rise in military spending can lead to economic and social implications such as resource reallocation from other sectors. This might lead to long-term impacts on societal development and economic balance. However, defense stocks like LMT and RTX appear to be continuing on an upward trajectory due to the current trend.
While the latest financial reports from Lockheed Martin and Raytheon Technologies would provide specific details on their stock performance, it's evident that both companies are likely profiting from the increased military spending. To keep a finger on the pulse, investors should closely monitor these companies' quarterly earnings and market trends to gauge the full impact of global military expenditure on their stock performance.
Investors who are interested in capitalizing on the surge in global military expenditure might consider looking into defense stocks like Lockheed Martin (LMT) and Raytheon Technologies (RTX). With increased spending in defense and aerospace industries, both companies, particularly Lockheed Martin with its focus on advanced aircraft and missile systems, and Raytheon Technologies with its diverse portfolio of defense and aerospace products, are poised to potentially benefit, given their roles as major defense contractors.
