Market Overview

Will ISIL Impact These Military Communications Players?

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President Barack Obama declared last week that the United States would step up its counter-terrorism efforts against ISIL.

In addition to selling more munitions and aviation fuel to the military, another benefit to the defense industry might be in the secret world of drones, communication and spy satellites.

Companies such as Lockheed Martin Corporation (NYSE: LMT) and Northrop Grumman Corporation (NYSE: NOC) play a major role here, and shareholders might profit from a need for more hardware.

Related Link: How Oil Has Made ISIL The Richest Terrorist Group In History

Milstar And Keyhole

Lockheed is the prime contractor for both the Milstar system of geostationary communications satellites and the Kennan (also known as Crystal and initially code-named Keyhole) spy satellites, which contain the latest imagery and communications technology.

More satellites could be ordered to increase Middle East capability down the road.

Depending on how long the counter-terrorism campaign lasts, Lockheed could also benefit from more sales of its F-35 Lightning II fighter.

Droning On With Global Hawk

Northrop Grumman, meanwhile, builds the high-altitude RQ-4 Global Hawk, a UAV used primarily for surveillance of enemy territory.

In essence, it's essentially a pilot-less version of the famed U-2. The Hawk can cover up to 40,000 square miles a day and report back to the ground systems using a satellite link. An expansion of the war on terror might mean more RQ-4 drones will be built in the future.

Disclosure: At the time of this writing, the author had no position in the equities mentioned in this report.

Posted-In: ISIL President ObamaPolitics Topics Global General

 

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