A Note From Our President & Founder Jim Garrettson
Investors made a sharp turn this week to defense and other government contracting stocks after the Friday Paris attacks in anticipation of increased activity in the global weapons market.
The GovCon Index had recorded a climb of 4.76 percent from last Friday’s close and was on pace to break the 80-point barrier for the first time since Feb. 22 as of this publication.
The Index posted gains for all four trading days this week compared to two by the S&P 500, of which 10 Index stocks are also listed in.
With this in mind, we looked at some of the most recent data available to see both the scale of the global arms trade and the composition of the industrial base behind it.
The Stockholm International Peace Research Institute — a notable global security think tank — estimates the world spent $1.75 trillion combined on defense in 2013 and the 100 largest weapons makers sold $402 billion in arms then.
Sixty-nine of those 100 companies and all of the top 10 are headquartered in either the U.S. or Western Europe.
Lockheed Martin, Boeing and Britain’s BAE Systems are respectively the top three with Raytheon, Northrop Grumman and General Dynamics in slots four through six.
Places seven through nine belong to trans-European contractor Airbus, United Technologies and Italy-based Finmeccanica with France’s Thales in 10th.
Thales and L-3 Communications switched places from the Institute’s 2012 rankings with L-3 in 11th for the 2013 list.
And already this week, we learned of two new arms deals struck by the U.S. government: a $1.29 billion sale of bombs to Saudi Arabia and a $157 million deal with Morocco for Raytheon-made missiles and missile launchers.
The government will hold a competition to determine the contractor for the sale to Saudi Arabia.
The U.S. Air Force has awarded Raytheon Technologies (NSYE: RTX) a $212.05 million sole-source delivery order to provide fighter aircraft engines to Morocco to fulfill a foreign military sales requirement. The order is for F100-PW-229 install engines, manufactured by Raytheon’s Pratt & Whitney business, as part of an indefinite-delivery/indefinite-quantity contract, the Department of Defense said
Lockheed Martin (NYSE: LMT) has received a potential 10-year, $62B contract from the U.S. Air Force to build F-16 fighter aircraft for foreign military sales clients.
Boeing (NYSE: BA) has secured a $439.2M contract modification from the U.S. Army to build AH-64E Apache helicopters for Morocco. The company will also provide Longbow flight simulators to support crew training with the attack helicopter platform, the Department of Defense said Thursday.
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And already this week, we learned of two new arms deals struck by the U.S. government: a 
