At the very start of Donald Trump’s second term in office he signed an executive order to build a system designed to protect US citizens and infrastructure from any and all possible attacks by air or from space. This project is only in the formative stages but promises to be very expensive for the US government and tax payers. It could also be incredibly lucrative for investors who get in on the ground floor. The system will be called the golden dome and for an investor the question is how to spot and take advantage of related investment opportunities.
What Is the Golden Dome?
According to Defense Feeds, the U.S. Golden Dome Defense System will be a multiple layer defense against intercontinental ballistic missiles and shorter range ballistic missiles, hypersonic missiles, cruise missiles, drone, bombers, and any new and currently nonexistent weapons arriving by air or from space. Trump promises that the system will be in place by the end of his term in 2029. Defense experts offer doubts about the projected costs and feasibility of the Golden Dome system. The backbone of the system will be space based interceptors that currently do not exist and for which technology will need to be developed.
Patented Technology Pertinent to a Golden Dome System
Although there are currently no specific plans for the Golden Dome System much technology exists. If you are looking ahead and thinking of investing in whomever will build the Golden Dome or who the subcontractors will be it will be useful to look at who currently has patented technology that will likely be used. The patriot missile system intercepts missiles, drones, etc. it has patented technology for systems such as radar, command and control, detection and interception, and hit to kill technology. Companies that own such patents include Lockheed Martin and Raytheon. Raytheon integrates the technology, and Lockheed Martin manufactures the missiles. In addition, Mitsubishi Heavy Industries in Japan is licensed to manufacture the system in Japan.
Space Based Versus Land Based Interceptor Systems
Although Lockheed Martin, Raytheon, and Mitsubishi Heavy Industries may have a head start with patents and experience in this area, the Golden Dome System will be built in and operated in space. As such one needs to think about who has the technology to efficiently and profitably place operating parts of the Golden Dome in space and operate them there. Two companies that are in the early bidding include Space X and Anduril. Space X has a huge advantage in carrying out multiple launches with their ability to reuse their boosters. Anduril specializes in AI and automated military systems. All in all there are currently more than a thousand defense contractors submitting bids on the Scalable Homeland Innovative Enterprise Layered Defense system with the acronym SHIELD.
How Can You Invest in the Golden Dome Project?
Assuming that much of the project will use existing technology, Raytheon and Lockheed Martin would seem to be beneficiaries. Over the last thirty years Lockheed Martin’s stock has risen from $26 a share to $478 a share. It currently has a PE ratio of 27 and a dividend yield of 2.89%. As it is a public company you can buy shares of its stock. Raytheon’s stock has risen over forty years from $28 a share to $180 today. Its PE ratio is 37 and its dividend yield is 1.51%. Both of these are big companies that provide a whole host of products for defense. As such any extra profit from the Golden Dome will be diluted as compared to a smaller company for whom a contract with the Golden Dome would be more significant. In the case of Space X, it is a privately held company with no plans to go public. The only way to invest is to do so indirectly by investing in a venture capital fund like the ARK Venture fund. This leaves you with the same dilutional effect as with Raytheon or Lockheed Martin. SpaceX, Palantir, and Anduril are bidding together on the project and while SpaceX and Anduril are private companies, Palantir is a public company and fairly young, being traded only since 2019 when it stock went for $9 a share while it goes for around $184 a share today. The company has a PE ratio of 430 and pays no dividend. Thus, it may be a viable option for investing in the Golden Dome but still suffers from the dilutional effect of being paired with Space X and Anduril plus it carries the risk of investing in a stock with a huge PE ratio and a stock price largely based on expectations of growth. Ideally one could find a small startup with unique technology that will benefit but that will require close attention to the defense tech sector and news of how bidding is progressing on this project. Good luck with your finding such a company and with any investment in the Golden Dome.