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Dear Fellow Investor,
European demand for defense is on the rise – especially with Russia wreaking havoc.
For one, countries including Britain, Germany and Italy, for example, have been spending heavily on U.S military equipment.
Italy just said it will meet NATO’s 2% of GDP target on defense spending this year. “Italy's projected defense budget for 2024 was 1.49% of GDP, according to NATO figures, one of the lowest levels among the countries in the military alliance, and it is under pressure from the United States to raise its outlays,” according to Reuters.
Spain also said it will meet that goal after spending just 1.3% on defense in 2024.
The European Union are also pushing for $867 billion in new defense spending.
The current measures are “an important step in the right direction,” but “maybe we need to be more ambitious,” Greek Prime Minister Kyriakos Mitsotakis told CNBC.
That’s helping to fuel upside in stocks such as:
Company: AeroVironment Inc. (SYM: AVAV)
AeroVironment, Inc. designs, develops, produces, delivers, and supports a portfolio of robotic systems and related services for government agencies and businesses in the United States and internationally. It operates through UnCrewed Systems (UxS); Loitering Munition Systems (LMS); and the MacCready Works (MW) segments.
Just this month, the company secured a $46.6 million contract with the Italian Ministry of Defense for the delivery of its JUMP 20 vertical takeoff and landing medium uncrewed aircraft.
Its subsidiary Telerob was also awarded a significant contract to deliver 41 large-sized advanced EOD/IED uncrewed ground vehicles (UGV) to the German Federal Armed Forces.
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Or, if you want broader exposure, we can look at exchange-traded funds (ETFs) such as:
ETF: SPDR S&P Aerospace & Defense ETF (SYM: XAR)
The SPDR S&P Aerospace & Defense ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Aerospace & Defense Select Industry Index. The XAR ETF has an expense ratio of 0.35%.
At about $168 a share, the XAR ETF offers exposure to 36 defense stocks including AeroVironment, Rocket Lab USA, Archer Aviation, Boeing, and General Dynamics.
ETF: iShares U.S. Aerospace & Defense ETF (SYM: ITA)
The iShares US Aerospace & Defense ETF invests in stocks in the domestic aerospace and defense sector. These stocks can include companies that manufacture both commercial and military aircraft as well as other types of defense-related equipment. The ITA ETF has an expense ratio of 0.40% at the moment.
At about $153 a share, the ITA ETF offers exposure to 36 holdings including GE Aerospace, RTX Corp., Boeing, Axon Enterprise, General Dynamics and L3 Harris Technologies.
Edge on the Street
Nvidia Announced a $500B AI Bet - Here's What It Could Mean For This Company
Nvidia just dropped a bombshell: They're planning to build up to $500 billion worth of AI infrastructure in the U.S. over the next few years.
That kind of investment doesn't just signal growth. It signals urgency.
Urgency to build data centers. Urgency to secure GPU clusters. Urgency to solve one of AI's biggest bottlenecks.
Here's where it gets interesting: There's a public company – still under most investors' radar – that's moving fast in this exact space.
Click to learn more about the overlooked opportunity in AI's infrastructure surge.
ETF: Power Shares Aerospace & Defense ETF (SYM: PPA)
The Invesco Aerospace & Defense ETF tracks a market-cap-weighted index of US-listed stocks involved in the defense, military, homeland security and space industries. The PPA ETF has an expense ratio of 0.57%.
At about $119 a share, the PPA ETF offers exposure to 57 holdings including Lockheed Martin, Boeing, RTX Corp., Northrop Grumman, General Dynamics and Honeywell International.
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Do you have your eye on any other aerospace/defense stocks or ETFs? What other sectors of the market do you feel are the best places to put your money to work right now? Hit "reply" to this email and let us know your thoughts!
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