CNBC's Jim Cramer suggested that defense companies are worthwhile investments as the U.S. empties its arsenals to aid allies Israel and Ukraine.
Cramer cited his Tuesday morning interview with RTX CEO Greg Hayes, who said the U.S. has primarily focused on fighting terrorism over the past two decades, and it doesn't have the capacity to supply land wars in both Ukraine and the Middle East.
"Our country's paltry land war-making capacity makes us a weaker arsenal of democracy, and sooner or later, either the White House or Congress will change how our defense budget gets spent," Cramer said. "That makes the big defense contractors investible."
He named several major defense contractors that are set to benefit from a Pentagon push, including Lockheed Martin, RTX, Boeing, Northrop Grumman and General Dynamics. Cramer said he thinks L3Harris may be the best because of its acquisition of rocket motor maker Aerojet Rocketdyne. The company's engines are used in common modern munitions such as Javelins, Stringers and Guided Multiple Launch Rocket Systems.
"After we got out of Iraq, then Afghanistan, it feels like our leaders convinced themselves that we'd have some kind of world peace situation on our hands. In reality, the rest of the world's only gotten more chaotic, and our government can't do anything about it if we run out of munitions," Cramer said. "That's why we need to rebuild this stuff as soon as possible, and because this is essential defense production, the replenishment needs to happen right here."
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