The U.S. Department of Defense (DoD) recently announced a new security package worth $175 million, offered by the Biden administration for Ukraine. Prior to this, in August 2023, the United States offered a $250 million aid to Ukraine, for supplying air defense and artillery munitions, mine-clearing equipment and medical vehicles.
The latest commitment made by President Biden takes the total security assistance provided by America to Ukraine to $43.7 billion since February 2022, following Russia’s Ukrainian invasion. The new security package has currently put the spotlight on U.S. defense majors like RTX Corporation RTX, Lockheed Martin LMT and General Dynamics GD, which are expected to gain in the near term.
Details of the Package
The latest aid package marks the 46th tranche of equipment to be provided from DoD inventories for Ukraine, since August 2021. It is aimed to provide the Ukrainian Armed Forces with additional air defense equipment; artillery munitions; and anti-tank weapons, including depleted uranium rounds for previously committed Abrams tanks.
In particular, the $175 million package pledges to supply additional ammunition for High Mobility Artillery Rocket Systems (HIMARS) as well as 155mm and 105mm artillery rounds. This aid also includes delivering Tube-Launched, Optically-Tracked, Wire-Guided (TOW) missiles, Javelin systems, more than 3 million rounds of small arms ammunition and some few more tactical equipment.
Defense Stocks to Gain
Considering the aforementioned discussion, it is quite obvious that U.S. defense contractors, particularly those manufacturing defense products pledged by America to Ukraine as part of the latest aid package, will gain substantially in the coming days. Also, their inherent growth prospects keep them on a prudent investor’s watchlist.
RTX: It is a renowned radar and missile maker in the United States. The company’s TOW missile is the long-range precision, heavy anti-tank and assault weapon system of choice for the U.S. Army Stryker, Bradley Fighting Vehicle, ITAS High-Mobility Multipurpose Wheeled Vehicle and Light Armored Vehicle-Anti-tank platforms. RTX is also the co-manufacturer of Javelin missile system, with this combat-proven weapon system having a reliability rate of more than 94%.
The company currently boasts a long-term earnings growth rate of 7.9%. The Zacks Consensus Estimate for RTX’s 2023 sales implies an improvement of 9.9% from the 2022 reported figure. It carries a Zacks Rank #3 (Hold) at present.
Lockheed Martin: It is the largest defense contractor in the world, with its main areas of focus in defense, space, intelligence, homeland security and information technology, including cyber security. The company’s HIMARS rocket launcher is a flexible, affordable and highly effective precision fires system designed to meet the demands of the modern battlefield. LMT is the other co-manufacturer of Javelin missile systems, which is the world’s first one-man-portable, fire-and-forget, multipurpose missile system.
The company boasts a long-term earnings growth rate of 6.5%. The Zacks Consensus Estimate for LMT’s 2023 sales implies an improvement of 0.9% from the 2022 reported figure. It currently holds a Zacks Rank #3.
General Dynamics: It is a renowned manufacturer of land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. The company’s Abrams is the most advanced main battle tank, which sports features that are technologically advanced in communications, fire control and lethality, reliability, sustainment and fuel efficiency, along with upgraded armor. GD’s Ordnance and Tactical Systems unit is one of the prime manufacturers of artillery rounds in the United States.
The company boasts a long-term earnings growth rate of 8.9%. The Zacks Consensus Estimate for GD’s 2023 sales implies an improvement of 7.3% from the 2022 reported figure. It holds a Zacks Rank #3 at present.
Lockheed Martin Corporation (LMT): Free Stock Analysis Report
General Dynamics Corporation (GD): Free Stock Analysis Report
RTX Corporation (RTX): Free Stock Analysis Report
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