There are plenty of investment opportunities out there for ethical investors.
If that’s you, neither of the two stocks we look at below are likely to meet your environmental social governance (ESG) standards.
However, at The Rum Rebellion we make no such litmus tests. In the words of former libertarian Senator David Leyonhjelm, ‘Here’s an alternative to ESG principles: invest in businesses that offer the best returns and use the proceeds to help make a difference based on your own values.’
Both stocks are heavily involved in the defence industry. Meaning, among other things, they develop certain items intended to kill people.
Chief among those items are the US’ new prototype hypersonic weapons. Missiles that can travel at five times the speed of sound and adjust course in mid-flight. Both Lockheed and Raytheon are prime contractors in the new weapons’ development.
As you may know, the US is playing catchup with both China and Russia in the field of hypersonic weapons. Now the US Department of Defense is pulling out all the stops to ensure they’re not the laggards for long.
This an agency, mind you, with a likely US$718 billion (AU$1.06 trillion) budget for 2020. And they’re splashing out big bucks on hypersonic weapons.
‘Defense Secretary Mark Esper said on Friday that the next Pentagon budget proposal will increase funding beyond the $5 billion provided in this year’s five-year budget plan for the technology that he called a key part of the “great-power competition” with China.’
Raytheon has a market cap of US$64 billion. The share price is up 32.9% over the past 12 months.
Lockheed Martin’s had an even better year. Its share price gained 49.7% since 29 January 2019. Giving it a market cap of US$123.3 billion.
After annual gains like these, there are no guarantees these stocks will perform near as well in the year ahead. They could even go down in value and lose investors money.
But with the deep pockets of the US Department of Defense backing some of their core projects, they could be well worth further investigation on your own.
Unless pesky ethics get in your way.