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With all the war talk in the last few months, you’d naturally assume the defense sector would be booming…
But since the Iran conflict began, major defense contractors have fallen an average of 17%.
So, why the disconnect?
Maybe investors are worried about the November midterms. If Democrats regain power, could defense spending see cuts?
That might be the case, but it still doesn’t take away from the opportunity I see in Raytheon (RTX).
As I’ve been reporting inside The War Room…
Reports out of Washington reveal that the US is running out of long-range missiles.
Long story short, Tomahawk production is surging. And RTX makes the Tomahawk.
The Navy just handed them a seven-year deal worth $22.9 billion. That takes production to about 1,000 missiles a year, up roughly 10-fold from recent levels.
Here’s what RTX President Phil Jasper said about it…
“Tomahawk is the Navy’s most important strike weapon, able to target hostile forces hundreds of miles away without ever risking the lives of our sailors. We are making significant investments in our workforce, technology, supply chain and facilities to dramatically boost production capacity and meet surging demand.”
Read that again. They are building out plants and hiring crews to fill a seven-year order book.
From a chart perspective, RTX is looking to break to new 2026 highs. As a pure defense play, I believe this stock is now a buy.
With each new day, there seems to be a new war-themed trigger that escalates the Iran situation. While this unnerves the market, it actually makes a strong case for a defense player like RTX… which is why I just traded it inside The War Room for a quick-hit winner.
