3 FTSE defence stocks to buy now

Highlights 

  • A SIPRI report found that the top 100 weapons manufacturers in the world posted profit growth of 1.3 per cent in 2020 on a yearly basis.
  • Arms manufacturers were mostly protected by sustained government demand for military goods and service.
  • BAE Systems stood at 6th place and was the highest-ranking European arms firm, according to the report

The top 100 weapons manufacturers in the world have seen their profits grow by 1.3 per cent in 2020 on a year-on-year basis, to a record level of US$ 531 billion, according to data from the global security institute, the Stockholm International Peace Research Institute (SIPRI).

The top weapons manufacturers posted profits for the sixth consecutive year, even though the global economy contracted by over 3 per cent.

The latest SIPRI report found that weapons manufacturers were mostly protected by sustained government demand for military goods and services.

The top 5 arms firms were all from the US, with aerospace and arms company Lockheed-Martin standing at the first position, reporting sales of US$ 58.2 billion.

UK based arms and security group BAE Systems stood at 6th place and was the highest-ranking European firm.

Let us take a look at 3 FTSE listed stocks from the defence sector which made it to the SIPRI list:

  1. BAE Systems PLC (LON: BA.)

BAE Systems is a British multinational security and aerospace group. It is a part of the FTSE 100 index.

The company its latest trading statement forecasts its 2021 sales growth to be between 3 to 5 per cent and its underlying earnings before interest and tax (EBIT) growth rate to be between 6 to 8 per cent.

The group anticipates its cumulative free cash flow (FCF) between 2021 and 2023 to be over £4 billion.

 

Image source: Refinitiv

Image description: BA share price and volume

BAE Systems’ shares were trading at GBX 554.60, up by 0.69 per cent on 6 December at 09:29 AM BST, while the FTSE 100 index was at 7,188.11, up by 0.92 per cent.

The company has a market cap of £17,452.69 million, and its year-to-date return stands at 13.46 per cent as of Monday.

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  1. Rolls-Royce Holdings Plc (LON: RR)

Rolls-Royce Holdings is a UK based defence and aerospace company and is also part of the FTSE 100 index. The company was at the 22nd position in the SIPRI’s list, one notch higher than 2019.

Earlier, the company had reported its H1 2021 underlying operating profit at £307 million, reversing from a loss of £1,630 million in H1 2020.

 

Image source: Refinitiv

Image description: RR share price and volume

Rolls-Royce’s shares were trading at GBX 124.96, up by 0.05 per cent on 6 December at 09:48 AM BST, while the aerospace and defence sectoral index was at 4,193.19, up by 0.43 per cent.

The company has a market cap of £ 10,451.13 million, and its year-to-date return stands at 12.27 per cent as of Monday.

  1. Qinetiq Group PLC (LON: QQ)

FTSE 250 index listed firm Qinetiq Group is a UK based multinational defence technology company. The company made a big jump of 15 places to appear on the 80th position in SIPRI’s list from 95th of the last year.

The company reported its H1 2022 underlying revenue at £600.1 million, compared to £603.2 million in H1 2021.

Qinetiq reported its H1 2022 underlying operating profit at £53.4 million, compared to £69.0 million in H1 2021.

 

Image source: Refinitiv

Image description: QQ share price and volume

Qinetiq’s shares were trading at GBX 254.20, up by 0.32 per cent on 6 December at 09:57 AM BST, while the FTSE 250 index was at 4,193.19, up by 0.43 per cent.

The company has a market cap of £1,466.57 million as of Monday.

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