• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Industrials

Cramer: Rallying Defense

The world is arming itself, lifting defense stocks.
By JIM CRAMER
Dec 23, 2014 | 05:57 AM EST
Stocks quotes in this article: RTN, NOC, LMT, GD

Another day, another 52-week high in most of the aerospace and defense stocks. It just seems like this group can do no wrong, despite sequestration, which took a real meat axe to it.

How is this possible? How can these companies be doing so well? It's pretty simple, actually. Just take a look at the most recent headlines and you will know how. Raytheon (RTN) was up big yesterday and that's because it won a $2.4 billion Patriot missile order from Qatar. That's a gigantic order, and it is a tacit recognition that the United States won't always be there for Qatar. It's found money for Raytheon and that unit. And it won't be the only found money. A host of European countries, growing mistrustful of their U.S. ally, are said to be considering multi-billion orders for the anti-missile defense system.

Northrop Grumman (NOC)? How about a $657 million order for unmanned armed vehicles. That's a big order, but who knows if the United States, this new United States, has the gumption to stand up to the North Koreans?

Lockheed Martin (LMT)? It got a nice pick-up of $308 million for some new radar from Taiwan for their F-16 fighter planes that might help them with Chinese adventurism.

The U.S. government just gave the Egyptian government ten Apache Helicopters -- a force to be reckoned with if ISIS expands its universe to attack the sworn foe of the movement.

You see, it is happening. The notion of the U.S. being the global policeman is breaking down. Whether it be the peace talks with Iran, or the pullouts from Afghanistan and Iraq, or the recognition that the United States may not be there if China starts trouble, the orders from overseas are creating the upside surprises we didn't think were possible not that long ago.

This is a group that last year came under heavy fire after the sequestration order that limited defense spending. While it has been more than two years since the deal that hit the military the hardest, we still haven't seen its repeal, although Washington wants to boost our own capabilities and is placing gigantic orders like the $12.5 billion armored truck contract that General Dynamics (GD) is vying for to replace the Vietnam-era variety.

Still, when short sellers were roaming the planet looking for companies that were going to report shortfalls, they seized upon this group as a natural one to hate. Sluggish. Thought to be banned from merging because of antitrust concerns, up a great deal of years, they seemed like natural fodder.

But they weren't, because our allies are now coming around to admitting that they have to arm themselves. Just think about it. Turkey and Jordan are right in the path of Isis. So are the Saudis, who think our overtures with Iran are sacrilege. Iraq has lost a huge amount of military equipment to Isis.

Then go to Russia and see the weapons that Ukraine needs and add to them the weapons that the Western bloc nations have to have if Russia decides to turn on them. You think that's farfetched? Tell that to the Poles.

Then go clear across the globe to Asia. South Korea's dealing with the usual rogue nation of North Korea, which seems more rogue than ever now that it is provoked by a movie, of all things. Do you think that Japan can trust a China that's building aircraft carriers, let alone Taiwan? I wouldn't think so.

The world's re-arming. We have pretty much the only companies that still make arms in sufficient quantity and size to give you security if you are a threatened regime. And that's how these stocks can keep rolling higher, despite the now stingy U.S. Congress and its sequestered military spending.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

TAGS: Investing | U.S. Equity | Industrials |

More from Industrials

At What Price Is Ballard Power Systems a Buy?

Bruce Kamich
Jan 15, 2021 3:09 PM EST

Let's check out the latest charts of BLDP.

Honeywell Jumps Into Vaccine Distribution but its Prices May Weaken

Bruce Kamich
Jan 15, 2021 9:14 AM EST

Let's review the charts and indicators.

Another Look at the Charts of Plug Power

Bruce Kamich
Jan 8, 2021 9:56 AM EST

Pay attention to the Japanese candlestick.

3 Breakout Candidates Living in the Materials World

Ed Ponsi
Jan 7, 2021 8:30 AM EST

The charts of U.S. Steel, Freeport-McMoRan and DuPont suggest that the surge in their shares may have just begun.

Markets React to Georgia Elections, Banks and Industrials to Gain, Oil Reduced

Stephen Guilfoyle
Jan 6, 2021 7:24 AM EST

I will have to give some of my favorite tech names a haircut in the name of balance. Hopefully everyone gained some exposure to gold.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    When it's time to sell, will you act or freeze?
  • 08:35 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/13/2021

    Lower highs... SPX (Long-Term View) The 1/8/2...
  • 08:07 AM EST GARY BERMAN

    Tuesday Morning Fibocall for 1/12/2021

    Watch if the recent trend of lower highs continues...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login