Follow us on social

Shutterstock_2138955391-scaled-e1677211261225

Ukraine War is great for the portfolio, as defense stocks enjoy a banner year

The top five US weapons firms outperformed major Wall Street indexes in the last year, mostly on the backs of American taxpayers.

Reporting | Europe

This is part of our weeklong series marking the one-year anniversary of the Russian invasion of Ukraine, February 24, 2022. See all of the stories here.

In January 2022, Raytheon CEO Greg Hayes told investors that global instability presented a profit opportunity for his weapons firm. "[W]e are seeing, I would say, opportunities for international sales," said Hayes, citing, among other global events, "tensions in Eastern Europe." He went on to add, "All of those things are putting pressure on some of the defense spending over there. So I fully expect we’re going to see some benefit from it."

Russia's catastrophic invasion of Ukraine unleashed financial and humanitarian pressures around the world driven by rising energy prices, ballooning inflation, and food supply chain disruptions.

But Hayes was right. Raytheon and fellow weapons manufacturers have profited handsomely, even while most investors suffered losses.

The big five weapons firms have achieved impressive stock growth since Russia’s invasion,  dramatically outperforming the major indexes. Shares in Lockheed Martin, Raytheon, Boeing, Northrop Grumman and General Dynamics appreciated in value 12.78 percent on average in the one-year span since the day before the Russian February 24 invasion last year until the close of financial markets on Thursday.

That growth is even more impressive when compared against the performance of the major indexes. The top weapons stocks, on average, outperformed the S&P 500 by 17.82 percent, the NASDAQ composite index by 23.88 percent, and the Dow Jones Industrial Average by 12.71 percent.

Two out of the three indexes, the S&P 500 and the NASDAQ Composite, reported losses in that one-year period.

Put another way, a $10,000 investment in the top five weapons firms on the day before the invasion would be worth $11,277 today. A $10,000 investment in the S&P 500 would be worth $9,495.

Much of the U.S. weapons industry’s revenues originate from U.S. government contracts, paid  by taxpayers. For example, Lockheed Martin, the world’s largest weapons manufacturer, may be a for-profit, publicly traded company but the firm’s 2021 annual report acknowledged that, “71% of our $67.0 billion in net sales were from the U.S. Government.”

And the returns of this largely government-funded industry aren’t just reinvested in production facilities and jobs across the country. Much of the returns are simply transferred to shareholders. Lockheed CEO James Taiclet, boasted about how the company delivered $11 billion to shareholders in 2022 via share repurchases and dividend payments, creating “significant value for our shareholders.” In other words, a partially taxpayer-funded payout for shareholders.

Most retail investors, who increasingly favor investing in index funds — a mutual fund or exchange-traded fund that matches the components of a financial market index such as the S&P 500 or the Dow Jones Industrial average — would have largely been left out of Lockheed’s stock buyback bonanza or the increased stock value of weapons firms that have all outperformed the major indexes in the one year since Russia’s invasion of Ukraine.

Indeed, important questions remain about how the war will end, what victory might look like for Ukraine, when and how the rebuilding of Ukraine can begin and the long-term impacts of Putin’s invasion on NATO and the European security architecture. The costs for rebuilding Ukraine’s infrastructure are already estimated at over $1 trillion and rising.

The war’s outcome remains unclear, but one thing is certain: the outbreak of a major war in Europe will spur U.S. and European weapons purchases for years to come.

A ballooning defense budget and U.S. national debt, coupled with high energy costs and global food shortages, will have negative impacts on most Americans. But investors in weapons stocks are reaping gains that few other industries are achieving at a time of global economic turmoil.

“Our products and technologies have been instrumental in helping the people of Ukraine defend itself,” argued Raytheon CEO Greg Hayes in an earnings call last month. Chris Calio — Raytheon’s chief operating officer — noted later in the call that “our backlog is expected to continue to grow, given the heightened and increasingly complex threat environment.”

In other words, a humanitarian, geopolitical, and economic disaster for the world has at least one silver lining: profits for arms manufacturers.


Image: CeltStudio via shutterstock.com
Reporting | Europe
 Abdel Fattah al-Burhan Sudan
Top image credit: Sudan's army chief Abdel Fattah al-Burhan gestures to soldiers inside the presidential palace after the Sudanese army said it had taken control of the building, in the capital Khartoum, Sudan March 26, 2025. Sudan Transitional Sovereignty Council/Handout via REUTERS

Saudi Arabia chooses sides in Sudan's civil war

Africa

In the final days of Ramadan, before Mecca's Grand Mosque, Sudan's de facto president and army chief, General Abdel Fattah al-Burhan knelt in prayer beside Saudi Crown Prince Mohammed Bin Salman. Al-Burhan had arrived in the kingdom just two days after his troops dealt a significant blow to the paramilitary Rapid Support Forces (RSF), recapturing the capital Khartoum after two years of civil war. Missing from the frame was the United Arab Emirates (UAE), the Gulf power that has backed al-Burhan’s rivals in Sudan’s civil war with arms, mercenaries, and political cover.

The scene captured the essence of a deepening rift between Saudi Arabia and the UAE — once allies in reshaping the Arab world, now architects of competing visions for Sudan and the region.

For two years, Sudan has been enveloped in chaos. The conflict that erupted in April 2023 between the Sudanese Armed forces (SAF) and the RSF, led by General Mohamed Hamdan Dagalo "Hemedti," has inflicted immense suffering: an estimated 150,000 killed, allegations of mass atrocities staining both sides but particularly the RSF in Darfur, 12 million displaced, and over half the population facing acute food insecurity.

keep readingShow less
Donald Trump Massad Boulos
Top image credit: Republican presidential nominee and former U.S. President Donald Trump is joined by Massad Boulos, who was recently named as a 'senior advisor to the President on Arab and Middle Eastern Affairs,' during a campaign stop at the Great Commoner restaurant in Dearborn, Michigan, U.S., on November 1, 2024. REUTERS/Brian Snyder/File Photo

Trump tasks first time envoy with the most complex Africa conflict

Africa

As the war between the Democratic Republic of the Congo (DRC) and allied militias against the Rwandan-backed M23 rebel group continues, the Trump administration is reportedly tapping Massad Boulos as the State Department’s special envoy to the African Great Lakes region.

In this capacity, Boulos will be responsible for leading the American diplomatic effort to bring long-desired stability to the region and to end a conflict that has been raging in the eastern DRC for decades.

keep readingShow less
Sens. Paul and Merkley to Trump: Are we 'stumbling' into another war?
Top photo credit: Sen. Rand Paul (R-Ky) (Gage Skidmore /Creative Commons) and Sen. Jeff Merkley (D-Ore.) )( USDA photo by Preston Keres)

Sens. Paul and Merkley to Trump: Are we 'stumbling' into another war?

QiOSK

Senators Rand Paul (R-Ky.) and Jeff Merkley (D-Ore.) have co-written a letter to the White House, demanding to know the administration’s strategy behind the now-18 days of airstrikes against the Houthis in Yemen.

The letter calls into question the supposed intent of these strikes “to establish deterrence,” acknowledging that neither the Biden administration’s strikes in October 2023, nor the years-long bombing campaign by Saudi Arabia from 2014 to 2020, were successful in debilitating the military organization's military capabilities.

keep readingShow less

Trump transition

Latest

Newsletter

Subscribe now to our weekly round-up and don't miss a beat with your favorite RS contributors and reporters, as well as staff analysis, opinion, and news promoting a positive, non-partisan vision of U.S. foreign policy.