The world, it appears, remains stubbornly attached to the notion of preparedness. Indeed, the combined expenditures on military matters for the past year reached a figure so astronomical it would make even a seasoned accountant blush – $2.7 trillion. America, naturally, leads the parade, accounting for roughly half that sum. One can almost hear the cash registers ringing, a symphony of fiscal responsibility…or something resembling it. The 2026 budget, a truly ambitious undertaking, is projected to swell to $1.48 trillion, an increase of half a trillion from the previous year. A tidy sum, wouldn’t you agree? It’s enough to make one suspect someone, somewhere, is planning a rather elaborate game of tag.
But the real surprise, the quiet mover in this grand, expensive dance, is Germany. They’ve decided to take their defense spending very seriously, emerging as the fourth-largest spender on the planet. A rather dramatic awakening, wouldn’t you say? In 2025, they allocated a respectable 86 billion euros to modernizing their forces. But that, it seems, was merely a prelude. The latest budget, approved with characteristic Teutonic efficiency, boosts that figure by a full 25%, to 108 billion euros. The ultimate goal? A staggering 152 billion euros by 2029. It’s a veritable arms race, conducted with the precision of a Swiss watch…and funded by the wallets of taxpayers.
For the astute observer, the one who understands the subtle art of profit, this presents an opportunity. A chance, if you will, to participate in this grand spectacle, not as a soldier, but as a…beneficiary. Let us consider, then, two companies particularly well-positioned to capitalize on this burgeoning demand for all things martial.
The Arsenal of Democracy
Lockheed Martin (LMT +2.28%) is, shall we say, a veteran of this particular game. Since 1994, they’ve been diligently supplying the United States and its allies with the tools of modern warfare. Helicopters, jets, transport planes, ammunition, missile systems, radar, ship-mounted weaponry, and now even satellites – if it shoots, flies, or explodes, Lockheed Martin likely has a hand in it. They are, in essence, the purveyors of preparedness, the merchants of might.
In 2025, America’s generous spending habits translated into $75 billion in sales for the company – a 6% increase. Earnings per share dipped slightly, a minor inconvenience, easily rectified. More importantly, the company’s cash reserves swelled by a remarkable 66%, reaching $4.12 billion, and operating cash flow surged by an even more impressive 214%, to $3.22 billion. A veritable avalanche of capital.
Their net margin currently sits at a respectable 6.69%, but one anticipates that the even larger 2026 budget will propel both revenues and profit margins to new heights. It’s a simple equation, really: increased spending equals increased profits. A truth universally acknowledged by those in the know.
Europe’s Sleeping Giant
Rheinmetall (RNMBY +1.12%), in many ways, is Germany’s answer to Lockheed Martin. Founded in 1889 as an artillery manufacturer, they’ve evolved into a comprehensive defense contractor, producing tanks, artillery, light armored vehicles, ammunition, ships, and, with a recent joint venture, even satellites. A rather impressive transformation, wouldn’t you agree?
Perhaps their most famous product is the main gun of the Leopard 2 tank, a formidable piece of machinery widely used around the globe. But Rheinmetall is more than just tanks. They are, in essence, the architects of armored warfare, the masters of mobile firepower.
And, naturally, they’ve been handsomely rewarded for their efforts. The recent surge in German military spending has filled their order books to overflowing. In the third quarter of 2025, sales increased by 13%, reaching 2.78 billion euros. Operating margins grew to 12.9%, the backlog swelled by 23%, to 63.8 billion euros, and net income surged by a remarkable 24.8%. A truly impressive performance.
Sales of vehicles increased by 8%, weapons and ammunition by 38%, and electronic solutions by 32%. The only slight dip came from their power systems segment, but even that was a mere 3%. The company anticipates record nominations for the fourth quarter, including orders for their Jackal, Puma, and Lynx IFVs, the Leopard 2 tank, trucks, and artillery ammunition. And their existing backlog assures them they’ll meet their full-year guidance of 35%-40% sales growth and a 15.5% operating margin. A truly enviable position.
The United States remains the world’s largest defense spender, but Germany’s budget is growing at a remarkable rate. For those seeking to profit from increased defense spending globally, companies arming both the U.S. and Germany appear to be…well, let’s just say they’re worth a closer look. It’s a simple observation, really: in times of conflict, some profit more than others. And in this particular game, Lockheed Martin and Rheinmetall appear to be holding all the winning cards.
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2026-02-07 00:14