According to Jim Cramer of CNBC, defense companies are an excellent investment option as the United States is depleting its arsenals to support its allies, namely Israel and Ukraine.
During an interview with RTX CEO Greg Hayes on Tuesday morning, Cramer noted that the United States has primarily concentrated on combating terrorism in the last two decades. Hayes mentioned that due to this focus, the U.S. may not have the capability to provide support for land wars in both Ukraine and the Middle East.
According to Cramer, the limited capacity for land warfare in our nation makes us a weaker defender of democracy. He believes that eventually, the allocation of funds for defense will be altered by either the White House or Congress. As a result, Cramer suggests that the major defense companies are worth investing in.
According to Jim Cramer, a number of major defense contractors are poised to benefit from a recent push by the Pentagon. These include Lockheed Martin, RTX, Boeing, Northrop Grumman, and General Dynamics. While all of these companies are expected to do well, Cramer believes that L3Harris may come out on top due to their acquisition of Aerojet Rocketdyne, a rocket motor maker. Aerojet Rocketdyne’s engines are used in widely-used modern munitions such as Javelins, Stringers, and Guided Multiple Launch Rocket Systems, which could give L3Harris a significant edge.
Cramer believes that once the US withdrew from Iraq and Afghanistan, the government assumed that the world would become more peaceful. However, this was far from the truth as the world has only become more chaotic. To make matters worse, if the country runs out of munitions, the government will not be able to do anything about it. Therefore, it is crucial that the government rebuilds the necessary equipment as soon as possible. In addition, since this is vital for defense production, the replenishment needs to happen domestically.
