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4 Major US Defense Stocks to Benefit From Saudi Exposure
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Saudi Arabia has been facing geo-political threats from neighboring nations like Iran, Yemen, and most currently Qatar. And, the United States tends to benefit the most from such flare-ups in the Middle East as Saudi Arabia stands out as the largest buyer of U.S. weaponries (per CNBC).
According to the Stockholm International Peace Research Institute, Saudi Arabia has accounted for 18% of U.S. arms sales in the past five years, totaling around $9 billion. A massive $110-billion arms deal was signed by President Trump with Saudi Arabia this May, which has the potential to touch $350 billion in the next decade. This signals the immense importance that Saudi Arabia has for American Defense giants.
Let’s take a closer look at such defense giants and their arms exposure in recent times with the Saudi Army.
Raytheon
Raytheon is one of the largest suppliers of weapons to Saudi Arabia. The defense giant has a fairly strong exposure to the Saudi Army. In March 2018, the U.S. government approved a deal worth $670 million under which the company is required to manufacture 6,700 missiles for the kingdom. Coming to recent numbers, the oil-rich monarch represented nearly 5% of Raytheon’s sales and $2.3 billion of its backlog as of September-end. Currently, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Per CNBC, Saudi Arabia recently signed a letter of offer and acceptance (LOA) with the United States for procuring Lockheed's 44 THAAD launchers, missiles and related equipment, amounting to $15 billion. In addition to THAAD, the kingdom will purchase Patriot PAC-3 Missiles and Multiple Launch Rocket Systems.
According to the company's CFO, Bruce Tanner, sales in Saudi Arabia for 2019 and 2020 could add up to about $900 million. The stock has a Zacks Rank #2.
Boeing, the world's largest aerospace company and leading manufacturer of defense, space and security systems, delivers F-15 fighter jets, Apache attack and armed reconnaissance helicopters, Harpoon missiles and launchers, and Joint Direct Attack Munitions to the Saudi Arabian mlitary. This year, Boeing clinched a contract for restarting production of standoff land attack missiles to support Saudi Arabia, extending its exposure to the Saudi Arabia’s defense force. Boeing holds a Zacks Rank #2.
General Dynamics delivers M1 Abrams Battle Tank to the armed forces of Saudi Arabia. Per the London Free Press, details emerged earlier this year about a prospective $15-billion contract to supply Saudi Arabia with General Dynamics' LAV 6 light armored vehicles for at least 14 years. Such orders will enable this defense giant to broaden its market in the country. The company currently carries a Zacks Rank #3 (Hold).
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4 Major US Defense Stocks to Benefit From Saudi Exposure
Saudi Arabia has been facing geo-political threats from neighboring nations like Iran, Yemen, and most currently Qatar. And, the United States tends to benefit the most from such flare-ups in the Middle East as Saudi Arabia stands out as the largest buyer of U.S. weaponries (per CNBC).
According to the Stockholm International Peace Research Institute, Saudi Arabia has accounted for 18% of U.S. arms sales in the past five years, totaling around $9 billion. A massive $110-billion arms deal was signed by President Trump with Saudi Arabia this May, which has the potential to touch $350 billion in the next decade. This signals the immense importance that Saudi Arabia has for American Defense giants.
Let’s take a closer look at such defense giants and their arms exposure in recent times with the Saudi Army.
Raytheon
Raytheon is one of the largest suppliers of weapons to Saudi Arabia. The defense giant has a fairly strong exposure to the Saudi Army. In March 2018, the U.S. government approved a deal worth $670 million under which the company is required to manufacture 6,700 missiles for the kingdom. Coming to recent numbers, the oil-rich monarch represented nearly 5% of Raytheon’s sales and $2.3 billion of its backlog as of September-end. Currently, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lockheed Martin Corp. (LMT - Free Report)
Per CNBC, Saudi Arabia recently signed a letter of offer and acceptance (LOA) with the United States for procuring Lockheed's 44 THAAD launchers, missiles and related equipment, amounting to $15 billion. In addition to THAAD, the kingdom will purchase Patriot PAC-3 Missiles and Multiple Launch Rocket Systems.
According to the company's CFO, Bruce Tanner, sales in Saudi Arabia for 2019 and 2020 could add up to about $900 million. The stock has a Zacks Rank #2.
The Boeing Company (BA - Free Report)
Boeing, the world's largest aerospace company and leading manufacturer of defense, space and security systems, delivers F-15 fighter jets, Apache attack and armed reconnaissance helicopters, Harpoon missiles and launchers, and Joint Direct Attack Munitions to the Saudi Arabian mlitary. This year, Boeing clinched a contract for restarting production of standoff land attack missiles to support Saudi Arabia, extending its exposure to the Saudi Arabia’s defense force. Boeing holds a Zacks Rank #2.
General Dynamics Corp. (GD - Free Report)
General Dynamics delivers M1 Abrams Battle Tank to the armed forces of Saudi Arabia. Per the London Free Press, details emerged earlier this year about a prospective $15-billion contract to supply Saudi Arabia with General Dynamics' LAV 6 light armored vehicles for at least 14 years. Such orders will enable this defense giant to broaden its market in the country. The company currently carries a Zacks Rank #3 (Hold).
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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