Military contractors

I have seen a few people here mention defense supply contractors as possibly good investments because we are sending so much of our inventory to Ukraine.

Since I’ve never invested in any of them I have never done research, so this is the skinniest top level of the top level, but…,

A couple quick searches tells me we have shipped around $18B in equipment and technology to Ukraine, out of an annual defense budget of $1.9T. So we’ve “spent” around 1% of one year’s Pentagon appropriation.

Presumably, because that’s just what we do, it’ll be replaced, but is that enough to move the needle for these various large contractors? (Looking for any port in a storm, here.)

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That is true but the pivot to China has to be weighted.

RTX forward yield 2.31%, I’d suggest if the market goes lower in 2023 the yield will be better.

I took a small ( 1% or so ) position in GD about a month ago ( don’t remember exact purchase date, and records are tucked away ).
I think of it as a trade. Weapons and associated systems inventories are going to need to be restocked, so that should be a tailwind for the short term future. It’s been a good gamble so far.

I’m not sure I would bank on continued shipments to Ukraine to bulk up profits. I commented some days ago about TV ads I’m seeing from “forsanity.org” protesting money spent on Ukraine. The “news” has also reported some 48%, the largest cohort, of people of a certain ilk, are against support for Ukraine. It is clear Putin has a lot of Shiny friends. If Congress has a change of control, the funding could stop on a dime.

Steve

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Steve,

Let’s put it this way, Billie Eilish just rocked the vote.

It is all over.

Over inflation after all was said and done 1 million people switched over. That is 0.6% of the 2018 off year total vote count.

Billie Eilish can rock well over 1 million to 5 million votes. And turn out this year is set to be bigger than 2018 anyway. Eilish took no position on who to vote for…

As pointed out, the needle is barely moved on the major contractors who are selling major packages. On the other hand, I’m taking (and have been for some time) positions in companies which specialize in electrical equipment and components. Far from glamourous, as EV’s are rolled out, the electrical grids of most industrialized countries will have to be upgraded. The destruction caused by the war in Ukraine will require major replacement/upgrades of their grid as well.

My personal “ETF” includes the following firms:
ABBN.sw Switzerland Abb Ltd N
AY UK Atlantica Sustainable Infrastructure
PHG Netherlands Koninklijke Philips N.V. Ny Reg
SIEGY Germany Siemens Ag Spon Adr Each Rep 0.
SBGSY France Schneider Electric Se Unspon Ad
EMR USA Emerson Electric Company
ETN USA Eaton Corporation, Plc
ENPH USA Enphase Energy, Inc.
ROK USA Rockwell Automation, Inc.
HUBB USA Hubbell Inc
HON USA Honeywell International Inc.
JCI USA Johnson Controls International
TEL Switzerland Te Connectivity Ltd. New Switze
APH USA Amphenol Corporation

Just a thought :slight_smile:

Jeff

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Perun has a good video debunking the idea that the US is seriously depleting its stockpile

There will be some replenishment, but spending is more likely for new systems. Probability was always low that the US would be in a conflict where it didn’t control the air, much less actually live or die dependent on a supply of Stinger missiles - and there are newer and better systems.

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This source (a government source) says $773B.

https://www.defense.gov/News/Releases/Release/Article/2980014/the-department-of-defense-releases-the-presidents-fiscal-year-2023-defense-budg/

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This one doesn’t. It puts it at 1.9T.

https://www.usaspending.gov/agency/department-of-defense?fy=2022

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