2024 is the U.S. election year where candidates propose big spending budgets to appeal to voters. President Biden introduced a giant $849.8 billion defense-spending budget. This is a 1% increase from the current budget.
Other than Boeing (BA), which has quality issues with its 737 Max, the aerospace and defense sector continues to thrive. Secretary of Defense Lloyd J. Austin III said that the budget positions the U.S. against the People’s Republic of China.
The proposal has two notable changes. First, it will let the defense department carry over up to 50% of its unspent budget to the next year. Second, the Pentagon would have higher spending thresholds before it needs approval from lawmakers. For example, the threshold for military personnel funding, research and development procurement, and operations and maintenance would increase.
L3Harris Technologies (LHX) is one of the companies poised to benefit. Although LHX stock trades at a rich valuation on weak growth, it is profitable. Rolls-Royce (RYCEY) has strong growth, profitability, momentum, and good value. The stock is the most attractive.
Axon Enterprise (AXON) supplies technology and weapons for military and law enforcement. Under the leadership of CEO and Founder Rick Smith, AXON stock returned 1,599% in the last 10 years.