I had looked at defense stocks and ETFs after the Ukraine invasion. I decided that I didn't have the expertise to choose an individual stock. I also decided I had waited too long to buy. I decided that PPA, the Invesco Aerospace and Defense ETF, would be my choice on a pullback. I've been following it.
It had dropped about 10% before the Hamas invasion. I bought it on the next market open and it has shot back up to an all time high. It is really overbought at present.
This is not a trade for me, it is an investment. I think it will take years to restock all the stuff we sent to the Ukraine. I also think that more governments are going to want more weapons with current geopolitical tensions. The US has the six largest global defense contractors and they are the biggest holdings in PPA. I plan to add on pullbacks.
I am intrigued that the US and NATO have run out of 155mm ammunition. I am looking at BAE systems BAESY. Its one of the few OTC ADR stocks that Vanguard will let me buy. It manufactures the most 155mm rounds for NATO. It is not in the Invesco ETF. General Dynamics is the largest US producer of 155 mm shells but it is a fraction of their business and GD is 5.7% of the ETF.