Aerospace and defense stocks have attracted increased investor interest following a surprise attack by the Hamas militant group on Israeli villages and communities on October 7. In response, Israel declared war, initiating a multi-day aerial bombardment campaign and planning a ground assault while evacuating northern Gaza.
Given a new war and the industry’s growing prominence with countries worldwide increasing their defense budgets and consistent technological advancements, fundamentally sound stocks Sturm, Ruger & Company, Inc. (RGR – Get Rating), Cadre Holdings, Inc. (CDRE – Get Rating) and Brady Corporation (BRC – Get Rating) could be ideal additions to your portfolio for stable returns.
Before diving deeper into their fundamentals, let’s discuss what’s happening in the air defense industry.
According to a research note from BofA Securities, the conflict between Israel and Hamas could potentially increase investments in the Department of Defense. BofA predicts that the United States will provide munitions, missiles, and antimissile systems to support Ukraine and Israel. This assistance is expected to enhance the performance of major U.S. defense contractors.
Along with this tailwind, the aerospace and defense industry is steadily investing in artificial intelligence and robotics. AI is being used in maintenance, health monitoring, airport operations, and pilot training, making it an essential aspect of the airspace. The artificial intelligence and robotics market in aerospace and defense is estimated to reach $34.60 billion by 2029, growing at a 7.8% CAGR.
Moreover, according to the Aerospace & Defense Global Market Report 2022, the aerospace and defense market is expected to reach $1.05 trillion in 2026 at a CAGR of 8.5%. Investors’ interest in defense stocks is evident from the SPDR S&P Aerospace & Defense ETF’s (XAR) 6.1% returns year-to-date.
Considering these conducive trends, let’s look at…
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