What factors should investors consider when investing in defense stocks?

It's important to be aware of the wider landscape and not simply how well a business is doing because it could be performing well based on old contracts and budgets. You need to think about government defense budgets, geopolitical risks, ethical considerations and a company's financial health. Since defense firms rely on government contracts, policy changes can heavily impact revenues and profit margins.

How do geopolitical events impact defense stocks?

Global conflicts and rising tensions often drive increased defense spending, boosting share prices of defense stocks. However, these stocks can also be volatile due to unpredictable geopolitical developments.

Are there ethical concerns with investing in defense stocks?

It depends on your personal views and ethics. Some investors avoid defense stocks due to concerns about weapons manufacturing and military involvement at home or abroad. Ethical considerations vary, so it's important to align your investments with your personal values.