Russia-Ukraine War: 3 Defence Stocks to Buy Now

The Russia-Ukraine War should spur investors to snatch up defence stocks like CAE Inc. (TSX:CAE)(NYSE:CAE) and others in 2022.

| More on:
edit Safety First illustration

Image source: Getty Images

Back in 2019, I’d discussed the steady rise of global military spending. At the time, I’d suggested that investors get in on top defence stocks, as we traverse an increasingly multipolar world.

When this week started, Russian president Vladimir Putin moved to acknowledge the sovereignty of two separatist entities in the eastern Ukraine. He followed that up with the movement of Russian troops and military vehicles into those areas. That was a mere prelude to the larger military operation that President Putin’s forces undertook in the early morning of February 24, 2022. This included a multi-pronged invasion and aerial bombardment of targets far further west, including the capital in Kiev. The ball is now in the court of NATO allies, who are sure to respond with further sanctions.

Here’s a defence stock to buy on the dip in late February

CAE (TSX:CAE)(NYSE:CAE) is a Montreal-based company that designs, manufactures, and supplies simulation equipment and training solutions to defence and security markets, commercial airlines, business aircraft operators, and others. Shares of this defence stock have dropped 4.9% in 2022 as of close on February 23. The stock is down 8.5% year over year.

The company released its third-quarter fiscal 2022 earnings on February 11. It posted revenue of $848 million — up from $832 million in the previous year. Meanwhile, its Defence segment revenue jumped 42% year over year to $426 million. Moreover, adjusted segment operating income rose to $32.0 million over $19.6 million in Q3 FY2021. CAE still boasts a strong pipeline of $6.2 billion.

Shares of this defence stock are trading in favourable value territory at the time of this writing.

Don’t sleep on this discounted defence stock today

Heroux-Devtek (TSX:HRX) is another Quebec-based company that is engaged in the design, development, manufacturing, assembling, and repair and overhaul of aircraft landing gears, custom ball screws, and other key components. This defence stock has plunged 9% so far this year. Its shares are still up 8.4% from the prior year. I’d suggested that investors scoop up Heroux-Devtek back in late 2021.

It released its third-quarter fiscal 2022 results on February 9. Net income fell 24% yea over year to $6.5 million. Meanwhile, reporting sales declined 13% to $131 million. Defence sales performed better than the sharp decline in Civil sales. However, adjusted net income in the year-to-date period was reported at $20.6 million — up from $18.8 million in the previous year.

This defence stock last had a favourable price-to-earnings ratio of 20.

One more TSX Venture stock to snatch up right now

A2Z Smart Technologies (TSXV:AZ)(NASDAQ:AZ) is the third defence stock I’d look to snatch up in late February. This Toronto-based company provides services in the field of advanced engineering capabilities to the military/security markets and governmental agencies in Israel. Shares of this defence stock have plunged 45% so far in 2022. The stock is down 82% year over year.

Shares of this defence stock last had an RSI of 34. That puts A2Z Smart Technologies stock just outside of technically oversold territory.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

oil and gas pipeline
Energy Stocks

Market Selloff: Enbridge (TSX:ENB) Could Be the Best Dividend Stock to Buy on the Dip

Here are key reasons why Enbridge could arguably be the best Canadian dividend stocks to buy amid the ongoing market…

Read more »

oil tank at night
Energy Stocks

Oil Below $80: Is Suncor Energy Still a Bargain?

Oil prices could drop further, but Suncor Energy (TSX:SU)(NYSE:SU) would still be undervalued.

Read more »

Pixelated acronym REIT made from cubes, mosaic pattern
Investing

TFSA Passive Income: Is RioCan (TSX:REI.UN) a Good Stock to Buy Now?

RioCan is down considerably from the 2022 high. Is this top Canadian REIT now a buy?

Read more »

cryptocurrency, crypto, blockchain
Tech Stocks

Sinking Crypto Stock: Is Hut 8 (TSX:HUT) Worth Buying at $2.30?

A prominent crypto stock trading at an absurdly cheap price, but you must have a high-risk appetite to consider buying…

Read more »

oil and natural gas
Energy Stocks

3 Energy Stocks Fell More Than 10% But Are Still Beating the Market

Three energy stocks continue to beat the market, despite dropping more than 10% during the sector’s pullback last week due…

Read more »

Hand holding smart phone with online shop concept on screen
Tech Stocks

Nasdaq Bear Market: Is Amazon Stock a Buy in Q4 2022?

Amazon stock is down 40% from record highs. But the trillion-dollar tech giant remains a compelling bet for long-term investors.

Read more »

Various Canadian dollars in gray pants pocket
Investing

2 Oversold TSX Dividend Stocks for Passive Income

Enbridge (TSX:ENB)(NYSE:ENB) and National Bank of Canada (TSX:NA) stock look like dividend bargains to load up on ahead of a…

Read more »

gold stocks gold mining
Metals and Mining Stocks

Is it Time to Grab TSX Gold Stocks at Their Multi-Year Lows?

Gold stocks generally outperform in falling markets. However, this time, it's different.

Read more »