SPDR S&P Aerospace & Defense ETF

Defense stocks entered 2024 trading at historically high valuations, which have since fallen. The S&P Aerospace & Defense ETF (XAR) gained 30% in 2024, but the author warned that the stocks were overpriced. Over the last three months, most of the top defense stocks have seen their price-to-sales ratios decline, likely due to a combination of broader market declines and investor anticipation of potential defense spending cuts under the incoming Trump administration.

Related tickers: XAR, KTOS, BA, BApA, TXT.

Defense ETFs dipped after ceasefire reports but quickly recovered, indicating long-term potential. Factors like ongoing conflicts, government defense budgets, and integration of advanced technologies suggest continued demand for defense stocks.

Related tickers: ITA, RTX, SHLD, XAR.