Defense Stocks Gain as US Boosts Caribbean Military Presence
Lockheed Martin, RTX, and General Dynamics in focus as 'Operation Southern Spear' deploys advanced F-35 fighters, signaling sustained military spending.
Shares of major U.S. defense contractors are drawing investor attention as Washington escalates its military presence in the Caribbean, highlighting a broader trend of rising global geopolitical tensions that is expected to fuel sustained defense spending.
In a significant strategic move dubbed "Operation Southern Spear," the U.S. has bolstered its forces near Venezuela. The deployment includes advanced naval assets and, notably, a squadron of F-35 stealth fighters, according to The Defense Watch. The operation, aimed at countering narcotics trafficking and exerting pressure on the Venezuelan government, underscores the critical role of high-tech military hardware in modern force projection.
The market has been responsive to these developments. Lockheed Martin (NYSE: LMT), the sole manufacturer of the F-35 fighter, saw its stock climb over 5% in November as details of the deployment emerged. The company’s shares traded around $482 on Tuesday. However, the gains come as a Pentagon watchdog blamed Lockheed Martin for maintenance issues related to the F-35 fleet, a counterpoint that highlights the operational pressures facing the defense giant even as demand remains robust.
RTX Corp. (NYSE: RTX), which supplies critical components for the F-35 including its F135 engine, is also firmly in the spotlight. The company’s stock was trading near its 52-week high of $185.87. Underscoring the high demand for its systems amid global instability, RTX’s Raytheon division announced it had secured a $1.7 billion contract to provide Patriot air and missile defense systems to Spain. Analysts note that escalations like the one in the Caribbean often lead to increased demand for missile systems and precision munitions, core business areas for RTX.
Other industry leaders, including General Dynamics (NYSE: GD), are benefiting from the favorable sector sentiment. While not as directly tied to the F-35 deployment, the company's role in producing a wide range of military hardware, from armored vehicles to naval systems, positions it to gain from broader increases in defense budgets. GD stock was trading around $344, well above its 200-day moving average.
The Caribbean deployment is seen by investors not as an isolated event, but as another data point confirming a new era of heightened military activity and international friction. As tensions involving Venezuela have simmered, the Pentagon has utilized strategic assets including B-52 and B-1B bombers in the region. This sustained operational tempo translates into long-term revenue for contractors through maintenance, munitions, and support contracts, a factor that continues to attract institutional investors to the sector.