Escalating geopolitical tensions has prompted nations to heighten their vigilance, intensifying their efforts to strengthen military capabilities through substantial increases in defense budgets. Higher defense spending by governments will likely benefit defense companies.
Therefore, it could be wise to consider buying fundamentally strong defense stocks Brady Corporation (BRC – Get Rating), Cadre Holdings, Inc. (CDRE – Get Rating), and Willis Lease Finance Corporation (WLFC – Get Rating).
Before diving deeper into the fundamentals of these stocks, let’s discuss why the defense industry is expected to perform well.
Wars have far-reaching impacts on the global economy and human lives. We live in a highly polarized world where wars and conflicts are becoming ordinary and regular. Conflicts persist in Ukraine, Israel and various other geopolitical flashpoints across the globe. Recently, Houthi attacks on cargo ships in the Red Sea have stoked fears of a broader Middle Eastern conflict.
These military flashpoints will likely be growth drivers for aerospace and defense companies. The global aerospace and defense market is projected to grow at a CAGR of 5.9% to reach $1.08 trillion. Investors’ interest in aerospace and defense stocks is evident from the iShares U.S. Aerospace & Defense ETF’s (ITA) 19.7% returns over the past three months.
Additionally, aerospace and defense (A&D) companies are adopting advanced technologies in order to reduce costs and achieve higher efficiency. These advanced technologies are helping them create more resilient supply chains, mitigate logistical issues and create new products.
Considering these conducive trends, let’s take a look at the fundamentals of the three Air/Defense Services stock picks, starting with…
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