Rich Peter
Investor, Crypto, US Stocks & High-Dividend ETFs
Northrop Grumman's B-21 bomber has reached a profitability inflection, removing a key risk and unlocking significant margin upside. After inflation-driven losses in early production, digital manufacturing gains and a new Air Force agreement have turned the program to positive operating income. A $95.61 billion backlog locks in years of revenue visibility, and B-21 and Sentinel sit in nuclear modernization spending that is essentially untouchable. Space defense adds growth. x.com
Northrop Grumman is the largest beneficiary of the Pentagon's 2026 push on the nuclear triad as sole prime for the Sentinel ICBM and the B-21 bomber. With B-21 write-downs behind it and the bomber in low-rate production, high-margin revenue should drive outsized profit growth. No other US company can deliver these programs. A new Navy contract for GQM-163A Coyote target missiles adds steady cash. Buybacks cut shares 4.6% in two years, and 2026 free cash flow is guided at $3.1-3.5 billion. x.com
Northrop Grumman shows a bullish disconnect: the stock is pricing in supply chain issues and lagging near its lows, while sales are surging and the government is ready to spend $1.5 trillion on new arms. x.com
Northrop Grumman is the higher-quality defense franchise and more clearly net good than L3Harris, because its major work, ICBM modernization, the B-21 and peaceful space programs like James Webb, serves deterrence. Historically, the more lethal a weapon, the greater its impact on peace: about 70,000 nuclear warheads at the Cold War peak were never used. Smaller armaments like L3Harris's are less clear-cut, since trigger-happy administrations blur defense and offense. x.com
Drone stocks fell in 2026 even as backlogs hit records: Ukraine turned aircraft into ammunition, and the Pentagon's 2027 request holds nearly $75B for drones and counter-drone. AeroVironment's reordered loitering munitions and Kratos's jet drones are highest conviction. Counter-drone names Ondas, Axon, Motorola Solutions, Safe Pro, DroneShield and Rheinmetall gain as threats grow, Unusual Machines from Chinese-parts bans. Primes bury drone exposure; pure plays may not convert backlog. x.com … Show more
RTX benefits from Pratt & Whitney's recovering jet-engine business alongside rising global defense budgets. In Q3 FY26, sales rose 11%, operating profit 32% with margins expanding, and net income to common 35%; basic EPS rose from $1.43 to $1.91. Grade A: RTX sits in the sweet spot as the world rearms and flies more. x.com
RTX's roughly $51 billion in recent multi-year missile deals and expanding backlog support a bullish setup. Backlog reached $289 billion last quarter, up 22% year over year, and management raised full-year sales, EPS and free cash flow guidance. The trigger is $193.90, with chart targets of $197.35, $200.41 and $202.67. x.com
Legacy defense primes such as Lockheed Martin, RTX and Northrop Grumman are losing work as counter-drone contracts go to newer software-defined systems. The US deployment of Anduril's counter-drone system for homeland defense shows a company that did not exist a decade ago doing what legacy air-defense primes used to own outright. The trade is that reallocation inside flat-to-modest budgets, not the budget number itself. x.com
Ondas could gain much more value if ULTRA becomes a major Air Force program and its integrated autonomy software earns recurring revenue. ULTRA costs roughly $10 million versus $30 million-$50 million for an MQ-9 and can fly for about three days; backlog is nearing $757 million. The upside depends on orders scaling, backlog converting and Palantir helping unify the acquired platforms. Heavy dilution and integration risk remain; revenue must outgrow the share count. x.com
Applied Aerospace & Defense offers exposure to growing defense, space and precision-strike spending through a business still very early in its public-market story. x.com
BAE Systems is a straightforward buy because the new era of defense spending is geopolitical, not cyclical, as NATO and allies rearm for a decade and Europe can no longer count on US protection. Long-cycle contracts and a record £80bn-plus backlog give visible revenue, sales grow steadily at 8-10%, and dividends rise about 8% a year. Its cyber, electronic and next-gen air systems have proven vital, and government-backed demand protects margins. It is no longer cheap, but quality rarely is. x.com
Lockheed Martin looks like a really great opportunity in defense, with orders outpacing deliveries at a reasonable valuation. Its backlog is a record $230B, almost 3x expected 2026 revenue, after $65B of new Q2 orders. Q2 sales grew 11% to $20.1B, and management raised free cash flow guidance to over $7B for 2026. It trades at about 18-19x 2026 earnings, reasonable for a sector leader; the next few weeks are about finding an entry point. x.com
