Hey, here’s some great news. It’s still not clear who attacked Saudi oil facilities over the weekend and what the fallout is going to be, but who cares? Wall Street analysts say the time is ripe to cash in on heightened global tensions by stocking up on shares of arms companies that provide Riyadh with its air defense systems.
“With all of this news around the attacks on two key Saudi Arabian oil facilities, are there buying opportunities?” asked TheStreet. Happily there are, and savvy investors could be “beneficiaries of [Saudi] misfortune Jim Kramer explained in this video. “The real winners are the companies that make radar,” he said. “Those are all buys.” He singled out Lockheed, Raytheon and L3 as being especially attractive targets.
Cramer elaborated in this post, “Here Are the Real Winners and Losers From the Saudi Oil Attacks.” The No. 1 winners were arms makers he again emphasized. “Every important piece of [Saudi] infrastructure must now be ‘hardened’ by radar that can help shoot down drones, especially drones that one day will be powered by solar energy,” he wrote.
Stock analyst Sheila Kahyoaglu of Jefferies shared Kramer’s optimism and was especially pleased about Raytheon’s prospects. “Raytheon could benefit the most in the industry from the Saudi oil attack,” she wrote in a report, as summarized in this story. “Saudi Arabia — which accounts for 5% of Raytheon’s total sales — has the largest defense budget in the Middle East, where spending correlates with oil. Per year, the country spends $52 billion on defense, making it the fifth-largest market in the world. Raytheon could get the biggest boost from the country’s increased spending because it has a broad portfolio of applicable products.”
What few people are talking about — and certainly no Wall Street analyst — is that the weapons U.S. companies sell to Saudi Arabia don’t work, which is apparent from the fact that U.S. provided Saudi air defense systems didn’t spot or react to the attacks. CBS News reported this morning that it had been told by “a senior U.S. official” had pinpointed where the attacks were launched from, this being southern Iran, at the northern end of the Persian Gulf.
So how come they weren’t spotted? “Saudi air defenses did not stop the drones and missiles because they were pointed southwards, to prevent attacks from Yemen, so they were useless against the missiles and drones coming in from the north,” the official told CBS.
OK, I guess that explains it. You can’t expect top-of-the-line multibillion weapons to see in more than one direction.
This story in Business Insider — “If US claims of how the Saudi oil attack went down are true, then the failure to prevent it is a huge embarrassment” — raised this rather obvious question:
The airspace around Iran and Saudi Arabia is some of the best-defended and most intensively monitored on earth, thanks to the decades-long buildup of US assets there….Assets to monitor attacks from Iran are considerable: a band of radars based in Kuwait, Qatar, and Bahrain are all pointed at Iran to provide early warning. Many US ships are in the area, equipped with the Aegis air-defense system, which has a range of some 300 nautical miles.
US land bases are also protected by similar, albeit shorter-range, systems. Saudi Arabia itself has spent billions on its air force and missile defense, including top-of-the-line US-made Patriot air-defense systems specifically meant to defend against Iran.
The story said that if the attack did come from Iran, it “represents a massive failure of the U.S. to notice or intercept the attack.”
But never mind. Buy arms companies’ stocks today and help defend Saudi Arabia and other American allies from the growing threat posed by solar-powered drones.