What is the Aegis Combat System mentioned in this stock group?

The Aegis Combat System is an advanced naval defense technology that acts as the "brain" of missile defense destroyers. It's an integrated command and control system that uses powerful computers and radars to detect, track, and guide weapons to intercept enemy missiles. Manufactured by Lockheed Martin, this system was recently proven effective when US Navy ships successfully intercepted Iranian missiles, highlighting its strategic importance.

What are Arleigh Burke-class destroyers?

Arleigh Burke-class destroyers are advanced warships used by the US Navy for various missions, including missile defense. Built by Huntington Ingalls Industries and General Dynamics, these ships carry sophisticated radar systems and can launch interceptor missiles to protect against ballistic missile threats. These destroyers were directly involved in the recent successful interception of Iranian missiles, demonstrating their effectiveness in real combat situations.

What is a "prime contractor" in defense?

A prime contractor is the main company that wins and manages large defense contracts directly with the government. They're responsible for delivering the complete system or product, often working with numerous subcontractors and suppliers. In the defense industry, being a prime contractor (like Lockheed Martin with the Aegis system) means having direct relationships with military decision-makers and typically commanding higher profit margins than subcontractors.

What are interceptor missiles like the SM-3?

Interceptor missiles, such as the Standard Missile-3 (SM-3) manufactured by Raytheon Technologies, are defensive weapons designed to destroy incoming ballistic missiles. Unlike offensive missiles, these don't carry explosive warheads—they destroy targets through direct collision at extremely high speeds, a method called "hit-to-kill." When a threat is detected, these interceptors are launched from ships, track the incoming missile, and neutralize it before it can reach its target.

How does geopolitical tension affect defense stocks?

Geopolitical tensions typically have a positive impact on defense stocks as they often lead to increased military spending. When events like missile attacks occur, governments tend to boost defense budgets to enhance readiness and replenish used munitions. For the companies in this group, the recent missile interception demonstrates both the effectiveness of their systems and the ongoing need for their products, potentially driving new orders, contract expansions, and higher revenues.

14 handpicked stocks

Naval Shield: Missile Defense at Sea

Discover companies at the forefront of naval missile defense technology. These carefully selected stocks represent the manufacturers behind the ships, combat systems, and interceptors that recently proved their effectiveness in real-world scenarios.

Han Tan | Market Analyst

Published on July 1

Top Picks from This Group

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

RTX Corp

RTX

Current price

$167.20

As the manufacturer of the Standard Missile-3 (SM-3) interceptors and the advanced AN/SPY-6 radar, the company is a direct beneficiary of missile cons...

As the manufacturer of the Standard Missile-3 (SM-3) interceptors and the advanced AN/SPY-6 radar, the company is a direct beneficiary of missile consumption and the need for upgraded naval defense systems.

Lockheed Martin Corporation

LMT

Current price

$499.91

Lockheed Martin is the prime contractor for the Aegis Combat System, the central command-and-control brain that enables the destroyers to detect, trac...

Lockheed Martin is the prime contractor for the Aegis Combat System, the central command-and-control brain that enables the destroyers to detect, track, and intercept ballistic missiles.

Huntington Ingalls Industries, Inc.

HII

Current price

$287.00

As one of only two companies that builds the Arleigh Burke-class guided-missile destroyers, Huntington Ingalls is critical to expanding and maintainin...

As one of only two companies that builds the Arleigh Burke-class guided-missile destroyers, Huntington Ingalls is critical to expanding and maintaining the fleet used for these missions.

General Dynamics Corporation

Current price

$339.49

Northrop Grumman Corporation

NOC

Current price

$605.66

L3Harris Technologies Inc

LHX

Current price

$300.47

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About This Group of Stocks

Our Expert Thinking

This collection focuses on defense contractors that are integral to maritime missile defense systems. Following the US Navy's successful interception of Iranian missiles, these companies are positioned to benefit from increased defense spending, fleet expansion, and the urgent need to replenish expended missile inventories.

What You Need to Know

These companies represent the top of the defense value chain, serving as prime contractors and key suppliers with high barriers to entry. They manufacture everything from destroyers themselves to radar systems, interceptor missiles, and command-and-control software that make naval missile defense possible.

Why These Stocks

Each company was selected for its direct involvement in the naval defense supply chain. From shipbuilders to microelectronics providers, these stocks offer concentrated exposure to a specialized segment of the defense industry particularly relevant in today's geopolitical climate.

Group Performance Snapshot

13 of 14

Stocks Rated Buy by Analysts

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

7.8% vs 4%

Group Growth vs Bank interest

This group averaged a 7.8% 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

🚢

Real-World Validation

The recent US Navy interception of Iranian missiles wasn't just a news headline—it was proof these systems work. This real-combat validation could accelerate contracts and funding.

💰

Budget Boost Coming

With missiles actually being fired in combat, militaries need to replenish their inventories. This urgent restocking, combined with heightened tensions, points to increased defense spending.

🔒

High Barriers to Entry

These companies operate in a specialized market with limited competition. Building destroyers and missile systems takes decades of expertise and government relationships that few can match.

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