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Sector Watch: BA vs LMT vs RTX

The United States and Israel launched joint military strikes on Iran on February 28, 2026 — an escalation that sent defense stocks surging and forced investors to reassess the sector's long-term trajectory. Boeing (BA), Lockheed Martin (LMT), and RTX Corporation (RTX) — the three largest U.S. defense contractors — each rallied on the news, but the question facing investors is no longer whether defense spending will grow, but which of these three giants offers the best combination of upside, profitability, and risk management in a world that is rapidly rearming. The macro backdrop is unambiguous. NATO allies are increasing defense spending to 2% or more of GDP, the UK just approved a £1 billion defense helicopter deal, and the geopolitical environment — from the Middle East to Eastern Europe to the Indo-Pacific — has never looked more favorable for defense contractors since the Cold War. All three stocks are trading near or at 52-week highs, with RTX leading the pack as the [largest by market cap at $272 billion](/article/sector-watch-why-defense-stocks-are-surging-geopolitical-catalysts-nato-spending-and-the-sectors-investors-are-watching). But these are very different businesses with very different risk profiles. Boeing is a turnaround story with a [negative tangible book value and massive debt](/article/ba-analysis-boeings-182-billion-turnaround-bet-why-the-aerospace-giant-still-loses-money-operationally-despite-90-billion-in-revenue). Lockheed Martin is a pure-play defense compounder [trading near its 52-week high of $669.75](/article/lmt-analysis-lockheed-martin-touches-a-52-week-high-as-global-rearmament-reshapes-the-defense-sector-is-the-rally-priced-in). RTX is a diversified powerhouse straddling both commercial aerospace and defense. Understanding these differences is critical before deploying capital into the sector.

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Sector Watch: Why Defense Stocks Are Surging

Defense stocks are having a remarkable run. Lockheed Martin, Northrop Grumman, RTX Corporation, General Dynamics, Boeing, and L3Harris Technologies are all trading near their 52-week highs, with some names up more than 80% from their lows over the past year. The rally is not happening in a vacuum — it is being driven by a convergence of geopolitical flashpoints that are forcing governments worldwide to accelerate military spending. The catalysts are stacking up. President Trump used his record-long 2026 State of the Union address to issue direct warnings to Iran and signal continued defense spending priorities. Japan announced plans to deploy missiles on islands near Taiwan by 2031, prompting immediate Chinese retaliation through export restrictions on 40 Japanese entities with military ties. Europe, marking four years since Russia's invasion of Ukraine, is debating the creation of a unified EU military force as NATO members scramble to meet the 2% GDP spending target. For investors, the question is whether these tailwinds are already priced in — or whether the defense sector still has room to run. With the six largest U.S. defense contractors now commanding a combined market capitalization exceeding $867 billion, understanding the fundamentals behind the rally is essential for anyone considering exposure to the sector.

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LMT: Lockheed Martin Touches a 52-Week High as Global

Lockheed Martin (NYSE: LMT) is trading at $658.26, within striking distance of its 52-week high of $668.25 and more than 60% above its 52-week low of $410.11. The world's largest defense contractor has been one of the standout performers in the industrials sector, lifted by a confluence of geopolitical tailwinds that would have seemed improbable just a few years ago: European nations scrambling to rearm, the U.S. ramping Middle East air assets to levels not seen since the 2003 Iraq invasion, and a global order that increasingly demands the kind of hardware Lockheed builds. Full-year 2025 revenue hit $75.1 billion, up from $71.0 billion in 2024, with free cash flow of $6.9 billion funding both a $3.1 billion dividend commitment and $3.0 billion in share buybacks. The F-35 program — the largest weapons program in history — remains the crown jewel, and reports of Germany potentially doubling its F-35 order sent the stock surging this week. But at 30.7x trailing earnings, Lockheed trades at a premium that demands scrutiny. For investors weighing whether to buy into the global defense upcycle or take profits near all-time highs, the numbers tell a nuanced story.

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