The Boom of Stocks Amid Growth and More
The post The Boom of Stocks Amid Growth and More appeared com. In recent years, the defense sector has emerged as one of the most dynamic and closely watched by financial markets. Rising geopolitical tensions and the increasing integration of technology, particularly artificial intelligence, have spotlighted companies that were until recently considered niche. Today, these stocks are delivering extraordinary performances, but there are critical elements that raise questions about the sustainability of current trends. Rheinmetall: the German Powerhouse Among the most prominent European names stands out Rheinmetall, a German giant specializing in armored military vehicles and ammunition. The company has experienced impressive growth: since the beginning of the year, the stock has recorded a return of 185%, a figure that surpasses the already brilliant German Dax, which stands at +30%. Revenue has also followed this trajectory, rising from just over 7 billion euros to 9. 75 billion, with a jump of about 30%. However, margins have remained stable, hovering around 8%, without signs of proportional improvement relative to revenues. A figure concerning analysts is the price-to-earnings (P/E) ratio, which has skyrocketed to 95: a value off the charts compared to market standards, raising doubts about the long-term sustainability of this rally. Leonardo: the Italian Champion In Italy, the standout stock is undoubtedly Leonardo, a key player both nationally and across Europe. The company operates on multiple fronts, from combat helicopters to electronic defense systems, and has achieved a year-to-date return of 95%, significantly outperforming its benchmark, the Ftse Mib, and ranking among the top five stocks in the index. Between 2023 and 2024, Leonardo saw its revenue grow by 15%, although maintaining relatively low margins, between 4% and 5%. However, the growth appears solid and consistent over time. The P/E ratio at 27 is decidedly more sustainable compared to that of Rheinmetall, making the stock less exposed to overvaluation risks. Thales: the French.
