Exchange-traded funds for aerospace and defense have seen their underlying value rise by double digits since Russia invaded Ukraine February 24. The four out of five winners this week were from the aerospace and defense sector.
The SPDR S&P 500 Trust ETF (NYSEARCA: SPY) -1.27% ended the week ending March 4 in the red after being in the green last week amid the Russia-Ukraine crisis. Since the start of the year, the ETF has been -9.01%. SPDR Sector Select Industrial (NYSEARCA:XLI) +1.27% reached green after being in the red for three weeks in a row. YTD -5.12%.
The top five gainers in the industrials sector (stocks with a market capitalization of over $2 billion) all gained more than +13%.
Mercury systems (NASDAQ:MRCY) +22.71%. It was a busy week for the defense and aerospace company, which gained throughout the week. Mercury started the week by winning a $165 million contract with the US Air Force.
On March 2, it was also reported that activist Elliott Investment Management had taken a stake in Mercury and made a bid to acquire it. The company also received a $7.4 million order for multi-function cockpit display technology.
Northrop Grumman (NYSE:NOC) +14.38% was part of a nearly $1.8 billion contract awarded by the US DoD for a next-generation military communications network of 126 satellites. Northrop Grumman won a $692 million contract, York Space took $382 million, while Lockheed Martin (NYSE: LMT) – who didn’t make this week’s top five but took 9th place with +11.88% earnings – reached a $700 million deal.
The chart below shows the 6-month total return performance of the top five winners and XLI:
L3Harris Technologies (NYSE: LHX) +14.29% and Elbit systems (NASDAQ: ILEC) +14.03% came third and fourth respectively.
L3Harris won earlier this week after winning a $3.69 billion Navy contract for portable radios and ancillary parts. Elbit didn’t appear to have anything major new this week, but rose the most on February 28 +15.52%.
KBR (NYSE: KBR) +13.20%. The engineering solutions provider has ranked in the top five for two consecutive weeks. KBR had won last week following its results.
The week’s top five declines among industrial stocks (market cap over $2 billion) lost more than -19% each.
TuSimple (NASDAQ:TSP) -32.65%. The autonomous trucking company again took the top spot after more than a month. The company experienced a management change on March 3, which also caused its share price to drop sharply that day (-21.92%). Co-founder and CTO Xiaodi Hou succeeded Cheng Lu as President and CEO and succeeded Mo Chen as President. Since the start of the year, the stock has been falling -67.95%.
Kanzhun (NASDAQ:BZ) -26.61%. The Chinese online recruitment platform was in the top 5 decliners after nearly two months. The company has consistently lost throughout the week, but Wall Street analysts’ rating is Buy with an average price target of $40.02.
The chart below shows the 6-month total return performance of the top five decliners and XLI:
AerCap (NYSE: AER) -24.12%. The world’s largest aircraft rental company plunged to its lowest level in three months on February 28 after saying it would stop doing business with Russian airlines as sanctions increase following the invasion of Ukraine. SA contributor Dhierin Bechai wrote: AerCap tumbles war sanctions against Russia.
United Airlines (NASDAQ: UAL) -19.93%. Travel stocks suffered during the week as investors weighed the implications of the Russian invasion. Following in the footsteps of the EU and Canada, President Biden announced a ban on Russian planes and airlines from entering US airspace. According to Wolfe Research, UAL may need to consider a potential capital raise to provide an additional liquidity cushion with oil trading above $100.
Vertiv (NYSE: VRT) -19.92%. The Ohio-based company, which provides equipment and services to data centers, was again among the five worst decliners this week after falling last week after its earnings result. YTD, the stock is down -57.67%.