3 U.S. Defense Stocks Set to Benefit From Israel-Hamas War
As the Israel-Hamas war escalates, look for these three U.S. defense stocks to benefit directly from the conflict.
Over the weekend, the Palestinian group Hamas, considered a terrorist organization by Israel, the U.S. and several other Western nations, launched a surprise attack on Israel, killing over 1,000 people and taking around 100 hostages.
Hamas’ deadly surprise attack on Saturday appears to have caught Israel off guard, as the Palestinian group was able to bypass one of the world’s most secure borders by bulldozing holes in the barrier and paragliding over from the Gaza Strip.
Israel’s response to the savage attack has been swift and devastating, with the Israeli government spending the last five days aggressively bombing the Gaza Strip from the air. With a full-on ground invasion of the Gaza Strip highly likely as the Israeli military continues to mobilize after calling up 300,000 reservists, it appears the conflict has only just begun.
In addition, it was recently reported that Hezbollah, a Lebanese Shia Islamist political party and militant group, fired several rockets into Israel from Lebanon. With the Israeli military retaliating against Hezbollah by shelling the militant group inside Lebanon, the threat of a second northern front opening up is now a serious possibility.
To help deter Lebanon and other Middle Eastern nations such as Iran, Jordan and Syria from entering the war against Israel, the U.S. pledged its full support for Israel, with President Biden also issuing a warning to other Middle East nations not to get involved.
In a show of force and to back up the warning to Middle Eastern nations, the United States deployed the U.S. Navy’s largest aircraft carrier group, the USS Gerald R. Ford to the Eastern Mediterranean Sea. As the U.S. Navy’s newest, largest and most advanced aircraft carrier, the USS Gerald R. Ford, its 5,000 sailors and full deck of warplanes will sail in an armada accompanied by additional warships such as destroyers and cruisers.
After landing in Israel today, U.S. Secretary of State Antony Blinken commented on the move, stating:
“He’s [Biden] backed up that warning with the deployment of our largest carrier group, the Gerald R. Ford, as well as again making sure that Israel has what it needs and that we also have appropriate assets in place.”
In the days following the attack, the Dow Jones U.S. Aerospace & Defense Index (INDEXDJX: DJSASD) climbed 6.4% on the premise that the Israel-Hamas war could escalate further and continue for an extended period. While war is often tragic and something that nobody wants to see happen, the reality of the situation is that some companies will benefit financially from this conflict.
With demand for American weapons and ammunition already surging, here are three U.S. defense stocks that could see big gains as a result of the Israel-Hamas war.
1. Lockheed Martin (LMT)
Lockheed Martin (NYSE: LMT) produces a variety of military hardware, including fighter jets, missile systems, and other defense platforms. When conflicts arise, such as the war between Israel and Hamas or when countries perceive threats and ramp up their defense expenditures, Lockheed often benefits from increased defense contracts.
2. Northrop Grumman (NOC)
Northrop Grumman (NYSE: NOC) designs, produces and maintains a wide range of military systems, including aircraft, unmanned systems, missile defense systems, and advanced electronics. When nations increase their defense budgets due to perceived threats or actual conflicts, companies like Northrop Grumman often see a rise in contracts.
3. RTX Corporation (RTX)
Raytheon Technologies, a subsidiary of RTX Corporation (NYSE: RTX), produces a range of military equipment, including missile systems, radar systems, sensors, and electronic warfare systems. Conflicts or perceived threats often lead to increased defense contracts as countries look to bolster their military capabilities.
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