This Must-Buy Defense Tech Stock Is Crushing The S&P 500 By Over 20%

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Photo by Isaac Smith on Unsplash

By putting his nuclear forces on high alert Feb. 28, Vladimir Putin threw the world a curveball.

It was the first time since the 1962 Cuban Missile Crisis that average Americans worried about the very real possibility of nuclear war.

Same as now, that existential threat came from Russia, formerly known as the Soviet Union. And the United States is not going to sit back and do nothing.

Leaders in the U.S. and among our NATO allies have held countless high-level talks on how the West will respond if Russia launches its nuclear missiles at Ukraine, or Europe, for that matter.

This incident crystalized a key fact that most of us simply ignore: Defending America against nuclear attacks is crucial, as is making sure we have the ability to counter-attack if necessary.

And playing a vital role in missile defense is our defense contractors, with financial support of about $17.1 billion in contracts.

Many of these defense contractors are strong companies to own regardless of whether there's a war going on, but at a time like this, they become particularly lucrative investment opportunities.

And with that in mind, I want to show you a tech firm that greatly aids in our defense against a nuclear attack - all while crushing the market so far this year...

This Stock Is Much More Than Just a Defense Pick

Based out of Reston, Va., Leidos Holdings Inc. (LDOS) is a defense, aviation, and IT contractor with a long history serving our country's defense needs. The company's IT division, for example, provides global IT support for over 37,000 U.S. Army Corps of Engineers personnel.

And that's just the start.

Leidos is a leader in zero-trust cybersecurity solutions. It has a team of 2,900 cybersecurity professionals on staff to handle client emergencies. That means helping both design new networks and systems with security in mind from the start, or securing existing networks.

It also recently acquired the largest independent ship design firm, Gibbs & Cox, which gave it a huge boost on naval cybersecurity, autonomous drones, and related areas.

In fact, Leidos is the company behind the Pentagon's new Sea Hunter unmanned anti-submarine naval vessel.

Now, this is no mere drone. This AI-controlled, completely unmanned submarine hunter is 132 feet long, weighs 135 tons, and can go for 70 days (or 12,000 miles) without refueling. It is currently one of the largest unmanned vehicles in the world.

But the scope of Leidos' operations goes much further than this design work.

The firm has a long history of serving as a contractor and subcontractor for NASA, and for over four decades, Leidos has provided U.S. intelligence agencies with space surveillance and missile detection systems and software.

Today, the company's defense and intelligence divisions account for 59% of its revenue. And that's before the likely increase that's coming now that Russia's aggression is bound to set off a new arms race.

Leidos Is Flush with Defense Contracts

Take Leidos subsidiary Dynetics, for example. Late last year, Dynetics announced that its joint project with Lockheed Martin Corp. (LMT) on a next-generation, hypersonic missile system had delivered the first four experimental launchers.

Set to be fielded in 2023, these new missiles will be faster and more maneuverable than ever, and they could help eliminate enemy nuclear weapons before they are used - or intercept them in mid-flight.

Leidos has also been beefing up its board of directors with a slew of defense experts, including retired Army Major General John George and former Acting Secretary of Defense Patrick Shanahan.

The firm also has a number of major defense contract wins under its belt, including:

  1. A $7.7 billion project with the Navy to upgrade its networks...
  2. A $6.5 billion deal with the Defense Information Systems Agency to run the network that connects every U.S. base in the world...
  3. And a $2.9 billion program for NASA's end-user technologies.

The backlog of signed orders just keeps growing, having risen 56% from Q1 2019 to Q2 2021. That's a good metric for long-term success as a federal supplier.

Add to that the $49 billion that Leidos currently has in submitted proposals, and just half of that would still be a hugely impressive number.

If all this weren't enough, its financials and performance metrics are stellar.

Financially, the company is a steady earnings grower on pace to double per-share profits in a little more than four years.

With so many contracts in the pipeline, it offers investors steady cash flow and pays a 1.9% dividend.

Finally: So far this year, Leidos is crushing the market. The S&P 500 is still a bit upside-down for the year, but Leidos has gained roughly 20%.

That makes this under-the-radar pick a good bet and a great hedge against volatility, and investors can feel good about putting their money into a company that helps keep America safe.

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