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3 Defense Stocks Take Center Stage on Middle East Jitters
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Geopolitical tensions lately heightened in the Middle East after Israel vowed to counterattack if Iran hit back due to a lethal airstrike on the Iranian Consulate in Syria. However, Iran overlooked the threat and launched an unprecedented payback attack on Israel.
Israel’s overwhelming war against Hamas in Gaza has already led to a humanitarian crisis. Several people are on the verge of famishment in the hard-hit northern Gaza, while Israel’s offensive ground attacks have taken several lives. The war began in October when Hamas carried out a surprise attack on Israeli civilians. But Israel’s war against Hamas is raising apprehension about a spillover in the remaining areas of the Middle East.
Regrettably, the Middle East crisis dented investors’ confidence in Wall Street. The 30-stock Dow declined for the fifth consecutive trading session on Apr 12 and posted its biggest weekly loss since Mar 10, 2023, as per Dow Jones Market Data.
The broader S&P 500 and the tech-laden Nasdaq also suffered weekly losses. On the other hand, Wall Street’s fear gauge, the Cboe Volatility index surged 16.1% to close at $17.31 on Friday, its biggest one-day percentage jump since March 2023, added Dow Jones Market Data.
However, a wartime situation is a blessing in disguise for defense stocks. These stocks are well-posed to rally following the outbreak of any conflict. After all, skirmishes boost defense sales through replenishments of ammunition. At the same time, the Middle East conflict is expected to compel the U.S. government to increase its defense investments soon, a tailwind for defense companies.
Lest we forget, the U.S. government’s outlays on defense have gone up this year compared to the prior year. And since defense stocks have stable government contracts for the long run they are worth an investment. Notably, the Invesco Aerospace & Defense ETF and iShares U.S. Aerospace & Defense ETF have gained 7.5% and 0.9%, respectively, year to date.
Textron manufactures aircraft and automotive engine components. Its products include military helicopters. Textron’s innovative combat-proven products are helping the company strengthen its financial position.
The Zacks Consensus Estimate for its current-year earnings has increased by 4.2% over the past 60 days. TXT’s expected earnings growth rate for the current and next year is 12.2% and 10.9%, respectively. Its estimated revenue growth rate for the current and next year is 7% and 6.8%, respectively.
Leidos serves the defense, intelligence, civil and health markets. Leidos’ lucrative defense solutions are gaining prominence among the Pentagon and other allies of the United States.
The Zacks Consensus Estimate for its current-year earnings has increased by 3.7% over the past 60 days. LDOS’s expected earnings growth rate for the current and next year is 6.3% and 9%, respectively. Its estimated revenue growth rate for the current and next year is 3.5% and 4.2%, respectively.
Teledyne Technologies serves the markets of aerospace and defense. Teledyne’s strategic buyouts have boosted its growth prospects.
The Zacks Consensus Estimate for its current-year earnings has increased by 0.4% over the past 60 days. TDY’s expected earnings growth rate for the current and next year is 4.4% and 7%, respectively. Its estimated revenue growth rate for the current and next year is 4.1% and 4.4%, respectively.
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3 Defense Stocks Take Center Stage on Middle East Jitters
Geopolitical tensions lately heightened in the Middle East after Israel vowed to counterattack if Iran hit back due to a lethal airstrike on the Iranian Consulate in Syria. However, Iran overlooked the threat and launched an unprecedented payback attack on Israel.
Israel’s overwhelming war against Hamas in Gaza has already led to a humanitarian crisis. Several people are on the verge of famishment in the hard-hit northern Gaza, while Israel’s offensive ground attacks have taken several lives. The war began in October when Hamas carried out a surprise attack on Israeli civilians. But Israel’s war against Hamas is raising apprehension about a spillover in the remaining areas of the Middle East.
Regrettably, the Middle East crisis dented investors’ confidence in Wall Street. The 30-stock Dow declined for the fifth consecutive trading session on Apr 12 and posted its biggest weekly loss since Mar 10, 2023, as per Dow Jones Market Data.
The broader S&P 500 and the tech-laden Nasdaq also suffered weekly losses. On the other hand, Wall Street’s fear gauge, the Cboe Volatility index surged 16.1% to close at $17.31 on Friday, its biggest one-day percentage jump since March 2023, added Dow Jones Market Data.
However, a wartime situation is a blessing in disguise for defense stocks. These stocks are well-posed to rally following the outbreak of any conflict. After all, skirmishes boost defense sales through replenishments of ammunition. At the same time, the Middle East conflict is expected to compel the U.S. government to increase its defense investments soon, a tailwind for defense companies.
Lest we forget, the U.S. government’s outlays on defense have gone up this year compared to the prior year. And since defense stocks have stable government contracts for the long run they are worth an investment. Notably, the Invesco Aerospace & Defense ETF and iShares U.S. Aerospace & Defense ETF have gained 7.5% and 0.9%, respectively, year to date.
Image Source: Zacks Investment Research
Of course, conflicts of any kind are deplorable, but solely from an investment standpoint, investors can place a bet on defense stocks such as Textron Inc. (TXT - Free Report) , Leidos Holdings, Inc. (LDOS - Free Report) and Teledyne Technologies Incorporated (TDY - Free Report) . They have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Textron manufactures aircraft and automotive engine components. Its products include military helicopters. Textron’s innovative combat-proven products are helping the company strengthen its financial position.
The Zacks Consensus Estimate for its current-year earnings has increased by 4.2% over the past 60 days. TXT’s expected earnings growth rate for the current and next year is 12.2% and 10.9%, respectively. Its estimated revenue growth rate for the current and next year is 7% and 6.8%, respectively.
Leidos serves the defense, intelligence, civil and health markets. Leidos’ lucrative defense solutions are gaining prominence among the Pentagon and other allies of the United States.
The Zacks Consensus Estimate for its current-year earnings has increased by 3.7% over the past 60 days. LDOS’s expected earnings growth rate for the current and next year is 6.3% and 9%, respectively. Its estimated revenue growth rate for the current and next year is 3.5% and 4.2%, respectively.
Teledyne Technologies serves the markets of aerospace and defense. Teledyne’s strategic buyouts have boosted its growth prospects.
The Zacks Consensus Estimate for its current-year earnings has increased by 0.4% over the past 60 days. TDY’s expected earnings growth rate for the current and next year is 4.4% and 7%, respectively. Its estimated revenue growth rate for the current and next year is 4.1% and 4.4%, respectively.