GovCon Expert Jim McAleese Observes Defense Stock Gains, Investor Expectations

A new McAleese & Associates report indicates that defense stock prices have spiked 18 percent to 20 percent year-to-date and outperformed the S&P 500 as sector investors react to the Russian invasion of Ukraine.

Jim McAleese, founder of McAleese & Associates and a three-time Wash100 winner, noted investors see a 10 percent spike in Department of Defense investment accounts for the 2022 and 2023 fiscal years.

President Biden’s latest defense budget request of $773 billion includes roughly $276 billion for procurement, research, development, test, and evaluation programs.

McAleese added that investors generally expected at least an additional 7 percent, or $54 billion, of FY 2023 DOD funding growth to at least $800 billion, compared with the $742 billion enacted in the current fiscal year.

DOD accelerated cash flow to contractors during the past two years to address the initial “liquidity crunch” from the COVID-19 pandemic, but a new department policy triggered “program-specific charges” for firm-fixed-price contracts, according to the report.

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