Image source: Getty Images
In the past few weeks, the BAE Systems‘ (LSE: BA.) share price has been surging once again. The sharp rise comes as little surprise to those of us who have been following the defence stock over the long term.
The company has thrived against a backdrop of elevated governmental spending in recent years. Of the FTSE 100 stocks on the index five years ago, I can count the number that outperformed it on one hand!
It’s my belief that this could only be just the start for BAE Systems’ shares. And I’ll outline why I believe that below. First though, let’s take a quick look at just how fruitful the last five years have been, and what a £5,000 example stake would be worth now…
Surging share price
BAE Systems shares were hovering near the 500p mark in 2021. A seismic shift followed the year after by way of a conflict erupting in Ukraine. The knock-on effects were many, but the salient detail here is that governments realised they’ve been taking our relatively peaceful time for granted.
Defence budgets surged, and promises of larger defence spending were plentiful. The BAE Systems share price rose too, passing the 2,000p mark in 2026.
Including a few modest dividends paid along the way, a £5,000 stake in the stock in August 2021 is now worth £20,642. That means the FTSE 100 stock handily outperformed giants such as Meta, Apple and Alphabet in the middle of a tech boom!
Good going, but what about the years ahead?
What next?
As mentioned, I believe BAE Systems will continue to thrive. Why? Because when it comes to an elevated state of conflict around the globe, there’s no putting the genie back in the bottle. Defence spending looks set to increase around the world. The UK’s just one country talking about increases of 50% of more relative to GDP.
I do concede that one of the oddities of a stock like this is that the more peaceful world we all long for would likely mean a worse performance for the share price. The easing of tensions leading to a downturn isn’t the only ‘risk’ as there’s the ethical component that may put some off investing.
There’s also no guarantee that increased spending helps – not if governments take their money elsewhere. But BAE Systems has proved again and again that it is capable of bagging big contracts for the latest high-tech kit. For one, their latest drone technology made headlines recently for its use in Russia.
And the world’s biggest spender on defence? The US, of course. And who is BAE Systems’ biggest customer, accounting for around 50% of revenues? Yep, you guessed it.
While rising 300% or more in a few years is unlikely to be repeated, but I think BAE Systems ticks all the boxes to be a solid investment in the years ahead. So I think it’s worth a look.
Should you invest £5,000 in BAE Systems right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BAE Systems made the list?
John Fieldsend owns shares in BAE Systems and Apple.
Image source: Getty Images
In the past few weeks, the BAE Systems‘ (LSE: BA.) share price has been surging once again. The sharp rise comes as little surprise to those of us who have been following the defence stock over the long term.
The company has thrived against a backdrop of elevated governmental spending in recent years. Of the FTSE 100 stocks on the index five years ago, I can count the number that outperformed it on one hand!
It’s my belief that this could only be just the start for BAE Systems’ shares. And I’ll outline why I believe that below. First though, let’s take a quick look at just how fruitful the last five years have been, and what a £5,000 example stake would be worth now…
Surging share price
BAE Systems shares were hovering near the 500p mark in 2021. A seismic shift followed the year after by way of a conflict erupting in Ukraine. The knock-on effects were many, but the salient detail here is that governments realised they’ve been taking our relatively peaceful time for granted.
Defence budgets surged, and promises of larger defence spending were plentiful. The BAE Systems share price rose too, passing the 2,000p mark in 2026.
Including a few modest dividends paid along the way, a £5,000 stake in the stock in August 2021 is now worth £20,642. That means the FTSE 100 stock handily outperformed giants such as Meta, Apple and Alphabet in the middle of a tech boom!
Good going, but what about the years ahead?
What next?
As mentioned, I believe BAE Systems will continue to thrive. Why? Because when it comes to an elevated state of conflict around the globe, there’s no putting the genie back in the bottle. Defence spending looks set to increase around the world. The UK’s just one country talking about increases of 50% of more relative to GDP.
I do concede that one of the oddities of a stock like this is that the more peaceful world we all long for would likely mean a worse performance for the share price. The easing of tensions leading to a downturn isn’t the only ‘risk’ as there’s the ethical component that may put some off investing.
There’s also no guarantee that increased spending helps – not if governments take their money elsewhere. But BAE Systems has proved again and again that it is capable of bagging big contracts for the latest high-tech kit. For one, their latest drone technology made headlines recently for its use in Russia.
And the world’s biggest spender on defence? The US, of course. And who is BAE Systems’ biggest customer, accounting for around 50% of revenues? Yep, you guessed it.
While rising 300% or more in a few years is unlikely to be repeated, but I think BAE Systems ticks all the boxes to be a solid investment in the years ahead. So I think it’s worth a look.
Should you invest £5,000 in BAE Systems right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BAE Systems made the list?
John Fieldsend owns shares in BAE Systems and Apple.
