Stocks of Lockheed Martin Corp (LMT) - Get Report , Raytheon Company (RTN) - Get Report and Northrop Grumman Corp (NOC) - Get Report jumped to all-time highs midday Wednesday as threats between North Korea and the U.S. intensified.
Even as the broader equities market sank with investors fleeing to safe haven assets, Lockheed stock jumped 1.56% to $304.79, Raytheon increased 2.19% to $178.62 and Northrop traded up 1% to $272.46.
The three stocks tend to gain on war chatter, but Lockheed and Raytheon both said they've been fielding an increased number of inquiries about their missile defense products as North Korea begins testing long-range missiles more frequently, Fox Business reported.
Lockheed, which is the Pentagon's top weapons supplier, said customers who want to defend themselves against possible incoming missile attacks have put missile defense at the top of their lists.
"The level of dialogue around missile defense is now at the prime minister and minister of defense level," Lockheed said. The U.S. government accounted for roughly 70% of Lockheed's business last year. The Maryland-based company has been working to grow its international business, which was 27% of revenue last year, Reuters reported.
"We are seeing significant demand signals for our integrated air and missile defense, cyber and ISR solutions driven by events going on around the world today," Raytheon said, according to Fox Business.
North Korea on Tuesday threatened to attack Guam, home to thousands of U.S. military personnel on two bases, and turn the U.S. into "the theater of nuclear war." The threat came after President Donald Trump told North Korea it would be met with "fire, fury and frankly power the likes of which this world has never seen before."
Raytheon is known for the Tomahawk missile and helped build the THAAD missile defense system with Lockheed. Lockheed sells it ships, planes and missile systems primarily to the U.S. intelligence community, the military and NASA.
Lockheed said the increased demand for missile defense systems could generate sales for years to come. Because the U.S. government sanctions purchases of weapons in a process that often lasts for years and requires approval from legislators, the windfall from today's heightened interest could last well into tomorrow.
Morgan Stanley analyst Rajeev Lalwani initiated coverage for the defense sector Tuesday with a favorable outlook. Lalwani said even with a great run in the last few months, defense stocks will continue to grow due to a high global threat environment, expanding political budgets and returns that will sustain valuations.
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