The U.S. Lead Inspector General of the Department of Defense reported that Operation Epic Fury spent $33.4 billion. It cost the government $22.3 billion in expended munitions, $7.4 billion in cumulative obligations, and $3.7 billion in equipment losses.
The high costs suggested that the U.S. will need to spend more on military equipment, infrastructure, and munitions. Rumors that the U.S. is low on munitions would imply that war suppliers will reap the benefits.
General Dynamics (GD), Lockheed Martin (LMT), Northrop Grumman (NOC), and Days & Zimmermann are the defense contractors and munitions makers to consider.
Lockheed stock continued to trade at a discount. Markets are wary of investing in the maker of Patriot missiles. Drones cost a fraction of missiles, so investors are betting that drone makers have better demand prospects.
In the drone sector, watch AeroVironment (AVAV). The firm has strong growth while the share price trades at a premium. Kratos (KTOS) also has growth, so markets valued the stock at a premium.
RTX (RTX) erased August’s stock gains. Its CEO, Chris Calio, expects both global air travel and global defense spending to support RTX’s growth. RTX has a backlog of $289 billion.
That figure will grow after adding recent contract wins. For example, the firm recently won an order for Tomahawks. The contract is for seven years and has a value of $23 billion.
