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As the Russia-Ukraine war and other geopolitical tensions continue, defense stocks such as Northrop Grumman (NOC), Lockheed Martin (LMT) and Raytheon (RTX) have come into focus. NOC stock, which has earned a spot on IBD Leaderboard, is inside a new buy zone.
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The aerospace and defense industry ranks a strong No. 28 out of the 197 groups IBD tracks. Hexcel (HXL), which supplies materials to defense equipment makers, leads the group with a 98 Composite Rating. Northrop Grumman and Lockheed Martin both earn an 88 rating, while Raytheon scores an 81.
As LMT and RTX look for support at key moving averages while basing, NOC stock is now trading just above a new buy point.
Northrop Grumman Developing First B-21 Bomber
Covering air, land, sea, space and cyberspace, Northrop Grumman develops and delivers defense systems and solutions for customers in 25 nations. In addition to the U.S., the defense contractor’s global presence includes Australia, Europe, Japan, the Middle East and South Korea.
Northrop Grumman is developing the first B-21 bomber, with the Air Force projecting a first flight in 2023. Last month, the company successfully completed the first — and most critical — loads calibration test of the first B-21 aircraft, a long-range strike bomber. That test is one of three major conditions the B-21 will undergo in this phase of ground testing on the way to its first flight.
Along with fellow defense stocks Lockheed Martin and Raytheon, Northrop Grumman does not have the traditional growth metrics common to CAN SLIM stocks. In Q1, earnings declined 7% and sales fell 5% vs. year-ago levels.
Vladimir Putin’s Russia attacked Ukraine in February, which boosted demand for defense stocks. Northrop Grumman soon jumped out to new highs, as did Lockheed Martin and Raytheon. Each has since encountered resistance, with NOC stock showing the most strength and resilience.
NOC Stock Flies Into New Buy Zone
Raytheon and Lockheed Martin are trying to break through resistance at their 10-week moving averages.
Northrop Grumman trades above that benchmark line and has just cleared a 477.36 buy point in a choppy cup with handle. Volume on Friday was above average as NOC stock jumped over 3%, but below downside volume in prior days. On a positive note, Northrop Grumman reversed higher on June 2 to close above its 50-day line.
The relative strength line is right around a new high as NOC stock breaks out today. Look for heavier volume to kick in to confirm demand for the stock.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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