For now, the Iranians seem content with their relatively harmless missile strike as a response to the U.S. killing of Gen. Qassem Soleimani. However, I argued that I’d be surprised if Iran didn’t eventually respond with far greater resolve. I believe this brewing conflict in the Middle East may bolster the case for speculative oil companies. It definitely supports the thesis for wartime stocks.
Witnessing events as they unfold, I’m increasingly confident that the U.S. will be dragged into another hot conflict in the oil-rich region. Amid the chaos of the last few days was the startling admission that Iran downed a Ukrainian airliner taking off from Tehran. Unsurprisingly, though, the Iranian regime blamed the U.S. for indirectly causing this tragic loss of life.
Further straining an already bitter feud, the U.S. also imposed fresh economic sanctions against Iran for the aforementioned missile strike. Such a move places increased pressure on the Iranian government, along with its citizens, many of whom have furiously protested the downing of the airliner. As well, much anger has been directed against the U.S. and Western allies.
You don’t have to be a geopolitical expert to recognize the catalyst for wartime stocks. In a bold action, the U.S. took down Iran’s top military leader. Responding to that killing, Iran stumbled into a tragic comedy of errors, ignominiously losing face.
As I said before, a serious response is surely coming. Given this strong likelihood, you may want to position yourself with these eight wartime stocks.
When I think of Raytheon (NYSE:RTN), one weapons system comes readily to mind: the Tomahawk cruise missile. Launched from either a ship or submarine, the Tomahawk can precision strike targets up to 1,000 miles away. This capacity to reach out and touch someone from distance drives the bullish case for RTN stock.
Better yet, the Tomahawk has a proven history of effectiveness. When the Syrian government allegedly used chemical attacks against civilians, the U.S. responded with Tomahawks launched from the USS Porter. If we do get into a hot conflict with Iran, I expect Raytheon to be a direct “beneficiary.” And in that situation, you’ll want exposure to RTN stock among other wartime stocks on your watch list.
Lockheed Martin (LMT)
As the manufacturer of the F-35 Lightning II, Lockheed Martin (NYSE:LMT) plays a pivotal role in our national security. Utilizing next-generation technologies, as well as multi-functional capabilities, the F-35 can get the business done. Should the crisis in Iran devolve into a broader conflict in the Middle East, expect the F-35, and by logical deduction, LMT stock, to see some action.
In addition, air superiority isn’t just about proving the deadly capacities inherent in the U.S. arsenal. Rather, future conflicts can be kept at bay through a show of force. Don’t forget that while Iran is presently the primary focus, there is potential for conflict elsewhere in the region. Thus, LMT stock is more than a play on a single geopolitical hot spot.
Northrop Grumman (NOC)
Revered (and to our enemies, feared) defense contractor Northrop Grumman (NYSE:NOC) is perhaps best known for its B-2 Stealth Bomber. Similar in design language to the World War II-era flying-wing prototype Horten Ho 229 (or Gotha 229), the B-2 is intimidation personified. Even more impressive, the Stealth Bomber is essentially invisible to radar.
That makes the B-2 the perfect platform for precision strikes, which is a signature of modern warfare. As such, NOC stock offers potentially profitable exposure should a U.S.-Iran conflict turn hot.
Moreover, Northrop Grumman has an eye on the future. Currently developing its B-21 Raider, the company seeks to establish dominance in long-range strike capacity. This is coming at a perfect time, considering the emergence of Russian and Chinese military assets. Therefore, you’ll want to keep close tabs on NOC stock.
L3Harris Technologies (LHX)
During periods of geopolitical conflicts, investors are tempted to hit up the headline-generating wartime stocks. Although that’s not a bad idea given the current situation, you may also want to consider what I’ll term background contractors like L3Harris Technologies (NYSE:LHX).
By background, I’m not making a slight against LHX stock. Instead, L3Harris specializes in securities and weapons systems, providing our armed forces with greater range and effectiveness. This is especially evident with L3Harris’ communications equipment for special operations units.
Modern warfare has evolved from a shock-and-awe approach to surgical missions. The latter has the advantage of inflicting great harm to the enemy without mass-scale escalation. As the U.S.-Iran conflict brews, I believe LHX stock will become progressively relevant among wartime stocks.
Huntington Ingalls Industries (HII)
Sometimes overlooked against other popular wartime stocks, Huntington Ingalls Industries (NYSE:HII) is nevertheless a company you’ll want to keep close tabs on. As the largest military shipbuilder in the U.S., Huntington Ingalls is particularly relevant now, given Iran’s critical waterways. Should the conflict rise in scope, HII stock will likely take off.
Even better, HII stock has another catalyst irrespective of any Middle Eastern tensions. Protecting our maritime territory from narcotics and illegal immigration falls under the jurisdiction of the U.S. Coast Guard. And Huntington Ingalls manufactures the National Security Cutter, which is the Coast Guard’s flagship.
Finally, Huntington is the only builder of U.S. Navy aircraft carriers. As a pivotal piece in America’s military presence abroad, carriers will likely continue to play an important role. Thus, HII has significant longevity among wartime stocks.
General Dynamics (GD)
One of the wartime stocks that made headlines prior to the U.S.-Iran crisis is General Dynamics (NYSE:GD). Last December, the U.S. Navy awarded it a contract worth a potential $299.9 million over the next four years. The scope of the contract involves the development and deployment support of fire control systems for the Navy and the United Kingdom’s Royal Navy nuclear ballistic-missile submarines.
For GD stock, ballistic missiles in general provide the basis for ongoing lucrative revenue streams. With Russia and China asserting themselves on the global stage, the U.S. Department of Defense is always looking for counteracting platforms. Developing a robust network of ballistic-missile systems, whether land- or sea-based, offers both a message and a deterrent.
Should that fail, General Dynamics’ weapons systems have a history of reliability and effectiveness. If tensions warm, GD stock is one to watch carefully.
Kratos Defense & Security Solutions (KTOS)
One of the smaller wartime stocks, Kratos Defense & Security Solutions (NASDAQ:KTOS) nevertheless packs a serious punch. This is especially true in the present geopolitical climate. Among Kratos’ specialty is drone technology, with a particularly exciting example being the XQ-58A Valkyrie.
An unmanned stealthy combat aerial vehicle, the Valkyrie is currently in the experimental phase. But its implications are incredibly positive, with the capacity to deliver lethal payloads while keeping service members safe. With demand for such weapons systems rising dramatically, I see KTOS stock as a long-term play.
Additionally, Kratos develops multiple training and simulation platforms, including ones using mixed reality systems. This training division keeps our forces a step ahead of our adversaries. Again, it also makes KTOS stock a smart pick for the long haul.
One of the many wartime stocks that feature a mix of military and civilian applications, Boeing (NYSE:BA) has an interesting take on the current U.S.-Iran tensions. Prior to Iran admitting to downing a Ukrainian airliner, media attention focused on Boeing. Why? Because the plane in question was manufactured by the company.
At first, stakeholders of BA stock braced for the worst. It couldn’t be. Not another Boeing-related crash. After all, the company suffered disastrous PR from its controversial 737 Max jetliner. Another incident would have likely caused substantial, perhaps irreparable pain.
However, Iran’s admission absolved Boeing. The incident also presented Boeing in a positive light, given that the company offered to help in the investigation. Admittedly, it’s a speculative bet but BA stock might experience a double lift here: one for exoneration of its civilian business and the other for its defense applications.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.