Defense News Roundup: Saudi Tanks, UAE Rockets, and Fighters for Tunisia

Missile defense
Meanwhile, the week’s largest new contract award deals with threats from above, rather than below. This one went to the nation’s largest pure-play defense contractor, Lockheed Martin Corporation (NYSE:LMT), which will be paid $3.92 billion — that’s right, with a “b” — to sell Terminal High Altitude Area Defense, or THAAD, Interceptor missiles and related equipment to the U.S. military, and also to the Persian Gulf nation of the United Arab Emirates, which is looking to shore up its defenses from missile-armed rogue regimes in the neighborhood.

While of limited use in defeating long-range intercontinental ballistic missiles, THAAD missiles are designed to provide theaterwide defense against short-, medium-, and intermediate-range ballistic missiles such as Scuds. The U.S. intends to buy 110 THAAD Interceptor missiles from Lockheed. UAE wants 192 more.

THAAD launch. Source: Wikimedia Commons.

Opportunities on the horizon
So much for the contracts that everyone knows about. Now, let’s move on to one contract that may not yet be incorporated into defense contractors’ stock prices.

On Thursday, we learned that the U.S. Defense Security Cooperation Agency has notified Congress of plans to sell upgraded avionics to the north African nation of Tunisia. The new equipment will “improve Tunisia’s capability to deter regional threats and strengthen its homeland defense” by modernizing its fleet of F-5E/F Tiger II fighter aircraft. These planes were originally build by Northrop Grumman Corporation (NYSE:NOC), and DSCA says Northrop will be the primary contractor on the work if Congress approves this $60 million arms sale.

Most investors aren’t factoring the extra revenues into their valuations for Northrop, because no one knows about the contract yet — except that now, you do.

The article Defense News Roundup: Saudi Tanks, UAE Rockets, and Fighters for Tunisia originally appeared on Fool.com and is written by Rich Smith.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Dominion Resources and owns shares of General Dynamics, Lockheed Martin, and Northrop Grumman.

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