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Defense Stocks Surge on High-Value Contracts

Strategic Insights

— 2 min read

Defense stocks have shown significant strength in recent days after the Department of Defense awarded several high-value contracts to major defense companies. General Dynamics, Lockheed Martin, and Boeing are among the companies that have benefited from these awards, which come on the heels of President Biden signing the $847 billion National Defense Authorization Act into law. This bill, which enjoys strong bipartisan support in Congress, represents a 10% increase over the 2021 defense spending levels.

Key Takeaways:

  • General Dynamics has received a $5.1 billion contract modification to advance the construction of the Columbia class of submarines, with the first two ships currently under construction and the lead ship set to be delivered to the Navy in 2027.
  • Lockheed Martin has secured a $1.05 billion contract to speed up F-35 fighter jet production, with the company working to deliver 118 Lot 18 F-35 Lightning II fighter jets by January 2024.
  • Boeing has received a $497 million contract for helicopter production, with the work locations and funding to be determined with each order and an expected completion date of December 30, 2025.
  • The defense budget increase reflects strong bipartisan support in Congress and a 10% increase over the 2021 defense spending levels.
  • General Dynamics' shares have risen about 13% over the last three months and 19% so far this year, while Lockheed Martin's shares have increased 20% over the last three months and 37% through 2022.
  • Boeing's shares have risen 11% this month after a recent deal to deliver 787 Dreamliners to United Airlines.

Statistics:

  • $5.1 billion: The value of the contract modification awarded to General Dynamics for the Columbia class of submarines.
  • 560 feet: The length of the Columbia class submarines, which will displace approximately 21,000 tons once completed.
  • 118: The number of F-35 Lightning II fighter jets that Lockheed Martin is working to deliver by January 2024 under the Lot 18 contract.
  • $1.05 billion: The value of the contract awarded to Lockheed Martin to speed up F-35 fighter jet production.
  • $847 billion: The total value of the National Defense Authorization Act signed into law by President Biden, representing a 10% increase over the 2021 defense spending levels.
  • 13%: The percentage increase in General Dynamics' shares over the last three months.
  • 19%: The percentage gain in General Dynamics' shares so far this year.
  • 20%: The percentage increase in Lockheed Martin's shares over the last three months.
  • 37%: The percentage gain in Lockheed Martin's shares through 2022.
  • 11%: The percentage increase in Boeing's shares this month.

Sources:

  • Department of Defense (Dec. 21, 2022): General Dynamics receives $5.1 billion contract modification for Columbia class submarines.
  • Department of Defense (Dec. 23, 2022): Lockheed Martin receives $1.05 billion contract for F-35 fighter jet production.
  • Department of Defense (Dec. 30, 2022): Boeing receives $497 million contract for helicopter production.
  • The White House (Dec. 21, 2022): President Biden signs $847 billion National Defense Authorization Act into law.

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