With less than two weeks to go before the end of the year and the worries about what's in store for 2023, buying stocks now might be a low priority for investors. The recession that many analysts predict might come soon could cause the market to swoon, so it's likely you may be able to buy stocks at lower prices later.
That's actually smart thinking, but rather than trying to time the market, savvy investors understand what's more important is their time in the market.
Image source: Getty Images.
Over the past 20 years through 2021, the stock market went up an average of 9.5% a year, but if you missed the 10 best days in the market, your returns would be nearly cut in half to 5.3% a year.
Continuously adding money to your portfolio to take advantage of good opportunities is key, and one of them just might be Raytheon Technologies (RTX -0.29%), the giant defense contractor, which has some unique catalysts for growth in 2023 and beyond.
The rising cost of keeping the peace
It's become a given that defense spending is rarely cut. The Pentagon might see the rate of growth in its budget cut, but more often than not, its absolute size continues to grow.
To a certain extent, that's a necessity, particularly during periods of high inflation such as we're seeing now, when even military materiel costs more. Yet it can also represent the times we find ourselves in, such as when there are global conflicts. And the war in Ukraine is one such time because we're helping the country defend itself against Russia's aggression.
Since the invasion in February, the U.S. has sent $68 billion to Ukraine, over $38 billion of which has been in military assistance, and President Biden just asked for an additional $37 billion to be sent. To put that into perspective, over the course of the entire 20-year war in Afghanistan, the U.S. spent $73 billion in military aid to the Afghan government.
And Raytheon has a special set of skills that it will benefit from with the rising arms trade.
Bristling with missile defenses
The U.S. has been supplying Ukraine with an array of weapons systems, including Stinger and Javelin missiles; high-speed, anti-radiation missiles (HARMS), and National Surface-to-Air Missile Systems (NASAMS). The president is also considering adding Patriot missile-defense systems to the package.
All of these weapons systems have a defining characteristic: They're made by Raytheon Technologies. And the Pentagon just awarded the defense contractor a $1.2 billion deal to supply Ukraine with six more NASAMS, which are used to thwart missile and drone attacks. The two NASAMS already delivered have had a 100% success rate in stopping attacks.
Although Ukraine is fighting desperately for its survival, U.S. support has been so prolific that we've drawn down our own stockpiles, in some cases to precarious levels.
Raytheon CEO Gregory Hayes recently told the Ronald Reagan Institute that the war in Ukraine has used up 13 years' worth of Stinger antiaircraft missiles along with five years' worth of Javelin anti-tank missile production.
A Patriot missile-defense system. Image source: Raytheon Technologies.
Freedom doesn't come cheap
The Pentagon is aware of the U.S. state of readiness, and it has begun addressing the situation. For example, it awarded Raytheon a $624 million contract for 1,300 Stinger missiles to replenish U.S. supplies. It is also looking at how else to rebuild our stockpiles of other weapons systems and add next-generation systems, such as hypersonic cruise missiles, none of which are cheap.
A single HARMS missile costs $200,000, according to the U.S. Air Force, while Stinger missiles go for about $38,000 each, and Javelins cost $78,000 apiece.
The Patriot system is on a whole different plane, with the missiles costing $4 million per round while the launchers go for $10 million each. NASAMS are up there, too, with a missile fetching $1.2 million each and the battery costing $23 million.
The best defense is a strong offense
We haven't even touched on Raytheon's successful commercial aerospace operations, but only because the war in Ukraine is of such immediate import. No one should ever want war, and a peaceful conclusion to the current hostilities can't come soon enough. Yet war is a reality that needs to be reckoned with.
Raytheon Technologies makes the munitions that allow countries to defend themselves from aggressors, and investors might want to buy shares of this stalwart defense stock now as it aids Ukraine. You'll also be able to reap the rewards in the future that follow from its more peaceful endeavors.
