What are Virginia-class submarines and why are they important?

Virginia-class submarines are advanced nuclear-powered attack submarines built for the U.S. Navy. They're important because they represent America's latest underwater defense technology, designed to replace older Los Angeles-class submarines. These vessels conduct intelligence gathering, special operations support, and anti-submarine warfare missions. The $1.85 billion contract modification mentioned in this stock collection is specifically for procuring materials needed to build these submarines, highlighting their strategic importance to national defense.

How do defense contracts affect stock performance?

Defense contracts, especially large ones like the $1.85 billion submarine program, can significantly impact stock performance by providing guaranteed, long-term revenue streams. Unlike commercial contracts that may fluctuate with economic conditions, government defense spending is often more stable and predictable. For investors, this means companies with major defense contracts may offer more consistent earnings visibility, potentially reducing investment risk. However, defense stocks can still be affected by broader budget priorities, administration changes, and geopolitical developments.

What is a "prime contractor" in defense projects?

A prime contractor is the main company responsible for completing a government project, like General Dynamics for the Virginia-class submarine program. They receive the primary contract directly from the government and manage the overall project execution. Prime contractors typically handle major design and integration work while subcontracting specialized components to other companies (suppliers). In defense stocks, prime contractors often have direct relationships with government agencies, providing them stability but also subjecting them to more scrutiny and contract requirements than smaller suppliers in the defense ecosystem.

What does "projected profit" mean in the stock data?

Projected profit refers to analysts' forecasts of how much money a company is expected to make in upcoming financial periods. This prediction is based on various factors including the company's past performance, current contracts (like the submarine program mentioned here), industry trends, and broader economic conditions. For defense contractors, projected profit can be more predictable when based on long-term government contracts. However, it's important to remember these are estimates, not guarantees, and actual results may differ from projections due to contract modifications, project delays, or unexpected expenses.

What is "long-term revenue visibility" and why does it matter?

Long-term revenue visibility refers to how confidently a company can predict its future income streams. For defense contractors in this collection, the $1.85 billion submarine contract provides clear visibility into future earnings because government contracts typically span multiple years with defined payment schedules. This matters to investors because it reduces uncertainty about a company's financial future, potentially making the investment less risky. Companies with high revenue visibility can often plan better for growth, research and development, and dividends, which may lead to more stable stock performance compared to businesses with less predictable revenue.

16 handpicked stocks

America's Undersea Arsenal

Dive into a selection of defense stocks set to benefit from the $1.85 billion Virginia-class submarine program. These companies have been carefully selected by our analysts for their critical roles in building America's advanced undersea fleet.

Han Tan | Market Analyst

Published on July 3

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

General Dynamics Corporation

Current price

$339.49

As the prime contractor for the Virginia-class submarine program, General Dynamics is the direct recipient of the $1.85 billion contract modification.

Huntington Ingalls Industries, Inc.

HII

Current price

$287.00

Huntington Ingalls Industries is the only other U.S. shipyard capable of building nuclear-powered submarines and is a key partner with General Dynamic...

Huntington Ingalls Industries is the only other U.S. shipyard capable of building nuclear-powered submarines and is a key partner with General Dynamics in constructing the Virginia-class fleet.

Northrop Grumman Corporation

NOC

Current price

$605.66

Northrop Grumman manufactures key systems and components for submarines, including sonar systems, electronic warfare equipment, and other critical tec...

Northrop Grumman manufactures key systems and components for submarines, including sonar systems, electronic warfare equipment, and other critical technologies.

RTX Corp

RTX

Current price

$167.20

L3Harris Technologies Inc

LHX

Current price

$300.47

Lockheed Martin Corporation

LMT

Current price

$499.91

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About This Group of Stocks

Our Expert Thinking

This collection focuses on companies benefiting from confirmed government spending on naval modernization. The recent $1.85 billion contract modification creates long-term revenue visibility for defense contractors and specialized suppliers across the submarine industrial base.

What You Need to Know

These stocks represent companies throughout the submarine supply chain, from prime contractors building the vessels to specialized suppliers providing critical systems like propulsion, sonar, and combat management. They offer tactical exposure to defense sector priorities.

Why These Stocks

Each company was selected for its direct connection to the Virginia-class submarine program. This government-backed initiative provides clear, long-term revenue streams, potentially de-risking investments while supporting sustained growth across the naval defense sector.

Group Performance Snapshot

14 of 16

Stocks Rated Buy by Analysts

14 of 16 assets in this group are rated Buy by professional analysts.

6.1% vs 4%

Group Growth vs Bank interest

This group averaged a 6.1% return last month, beating the typical 4% bank rate.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

💰

Guaranteed Government Spending

These companies benefit from confirmed, long-term government contracts worth billions. The Virginia-class submarine program provides revenue visibility that few other sectors can match.

🛡️

National Security Priority

Naval modernization remains a top defense priority regardless of political shifts. These companies are crucial to maintaining America's undersea advantage, making them strategically important investments.

🔍

Hidden Supply Chain Gems

Beyond the big defense contractors, this collection includes specialized suppliers that fly under the radar but play critical roles in submarine construction, potentially offering overlooked growth opportunities.

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