Today, US President Joe Biden announced another major aid package for Ukraine. This time it’s up to $800 million. Since Russia began its invasion of the country in February, the ongoing geopolitical dispute has pushed defense stocks higher. Now that it’s dragging on, this latest federal aid package signals another month of growth for the sector.
This latest announcement brings the total value of US military assistance to Ukraine to $2.5 billion so far. Defense stocks rose accordingly and today is no different; many of the largest producers in the United States are trending upwards. Both Northrop Grumman (NYSE:NOC) and Lockheed Martin (NYSE:LMT) ended the day slightly in the green. Raytheon Technologies (NYSE:RTX) had a slightly better day, up 0.75%.
All three defense stocks have fallen from their previous highs today, although they ultimately benefited from the aid news.
What’s going on with defense stocks?
These three companies traded well throughout the month. End of March, InvestorPlace contributor Muslim Farooque hailed them as some of the most promising coins in the industry, long before today’s aid announcement. Now that investors know that the government’s focus on military aid will continue, they can approach these defense actions with an even more optimistic mindset.
InvestorPlace Contributor Cristian Docan also considers RTX shares a “great hedge” for investors looking to protect their portfolios from inflation. Docan notes that “the company’s momentum is not expected to stop as the war in Ukraine increases NATO members’ military spending.” This logic can also apply to its competitors; Both LMT and NOC have achieved similar results since the conflict began. Now, the new aid program means that the demand for military technology will only increase.
These three companies are well positioned to meet this incoming demand. Investors should also remember that Lockheed and Raytheon previously partnered on the technology used to defend Ukraine today.
What this means
Currently, the end of Russia’s invasion of Ukraine is not really in sight. As such, investors will likely double down on defense stocks. As long as the United States provides military aid to the country, companies like LMT, RXT and NOC will have a lot of work to do. Recent geopolitical tensions have led to an unpredictable market landscape, but it is clear that the defense sector could soon recover even more.
At the date of publication, Samuel O’Brient held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.