But that's exactly what's ahead, and investors are beginning to pour money back into defense stocks after a long lull. Replacing aging aircraft and weapons systems will be a priority, analysts said, under either a Republican or Democratic White House. Already, major defense contractors are seeing rising expectations, with the aerospace sector rising more than 54 percent in the past six months. Several of the biggest names have posted substantial gains during that time. The big winner, though, is Northrop Grumman Corp., up 79 percent.
Peace can be hell on defense stocks.
That's up more than 30 percent from current levels. This expectation of increased spending is the foundation for the sector's recent surge, but other factors contribute to the bullish atmosphere. Industry consolidation has cut the playing field of major contractors by more than half, meaning fewer contractors are competing for a growing pool of dollars. And massive restructuring programs and costly integration plans among contractors as they merged are starting to iron themselves out, analysts said. Despite an uptick in spending under Clinton, many companies in the sector stumbled badly as they started to ramp up production.