US Defense Contractors Getting Paid Off on so-called ISIS and al-Qaeda Offensive

From [HERE] Stock prices for Lockheed Martin, General Dynamics, Raytheon and Northrop Grumman set all-time record highs last week as it became increasingly clear that President Obama was committed to a massive, sustained air war in Iraq and Syria.

It’s nothing short of a windfall for these and other huge defense contractors, who’ve been getting itchy about federal budget pressures that threatened to slow the rate of increase in military spending.

Now, with U.S. forces literally blowing through tens of millions of dollars of munitions a day, the industry is not just counting on vast spending to replenish inventory, but hoping for a new era of reliance on supremely expensive military hardware.

“To the extent we can shift away from relying on troops and rely more heavily on equipment — that could present an opportunity,” Jack Ablin, chief investment officer at BMO Private Bank, whose $66 billion portfolio includes Northrop Grumman Corp. and Boeing Co. shares, told Bloomberg.

Defense contractor stocks have far exceeded the performance of the broader market. A Bloomberg index of four of the largest Pentagon contractors rose 19 percent this year, compared to 2.2 percent for the S&P 500.

It’s the munition makers who “stand to reap the biggest windfall, especially in the short term,” says Fortune magazine, citing Raytheon’s long-range Tomahawk missiles, and Lockheed Martin’s Hellfires, among others. “Small diameter bombs could be a huge winner, since aircraft can carry more of them in a single sortie,” one analyst tells the magazine.

U.S. forces used 47 Tomahawk missiles on Monday alone, at $1.5 million apiece.

Smart “small-diameter bombs” cost about $250,000 each. [MORE]