General Dynamics (GD): A Bull Market in Defense is Here—Buy Now Before It's Too Late

The defense sector has been a battlefield of volatility in 2025, but one titan is standing tall: General Dynamics (GD). While broader defense ETFs like ITA and XAR slump under tariff pressures, GD is firing on all cylinders—revenue surging, margins expanding, and a $88.7 billion backlog that screams “buy now.” Let's dissect why this stock is primed to outperform and why investors shouldn't miss this opportunity.

The Fundamentals: GD is Built to Weather Storms

Let's start with the numbers. Q1 2025 was a blockbuster:
- Revenue jumped 13.9% to $12.22 billion, fueled by a 45% surge in Aerospace revenue to $3.03 billion (Gulfstream's G800 finally certified!).
- Net income skyrocketed 24.4% to $994 million, with EPS blowing past estimates at $3.66.
- Operating margins expanded 70 basis points to 10.4%, thanks to cost discipline in Marine Systems (submarines) and GDIT's cybersecurity boom.

Yes, the backlog dipped slightly to $88.7 billion from $90.6 billion—but this is a drop in the ocean. With $1.1 billion allocated for Virginia-class submarine long-lead materials and $5.6 billion locked in for GDIT's Mission Partner Environment contract, this backlog represents 1.5 years of revenue**.

Dividend Discipline: A 28-Year Streak Isn't Luck

GD's dividend isn't just a perk—it's a war machine of shareholder returns.
- 5.6% dividend hike to $1.50 per share in Q1 maintains its 28-year streak of annual increases.
- Dividend yield of 2.34% beats the S&P 500's 1.3% and offers stability in a volatile market.
- $600 million allocated to buybacks this year further fuels EPS growth.

This isn't a “set it and forget it” dividend. It's a signal: management is laser-focused on rewarding investors while reinvesting in growth.

Strategic Positioning: GD Owns the Future of Defense

While U.S. defense budgets face headwinds, GD is doubly insulated by global demand and tech dominance:
1. Submarines & Cybersecurity:
- The Marine Systems segment's $38.4 billion backlog includes Columbia-class subs and Virginia-class Block VI. These programs are non-negotiable for U.S. naval power.
- GDIT's cybersecurity arm (part of the Technologies segment) is a goldmine, with $47 billion in backlog. The $5.6B Mission Partner Environment contract alone ensures dominance in secure IT solutions.

1. European Growth:

2. Germany's $16.9 billion order for Piranha armored vehicles and Latvia's ASCOD deal highlight GD's diversification beyond U.S. borders. NATO's 4% GDP spending target? GD is cashing in.

3. Aerospace Renaissance:

4. The Gulfstream G700/G800 are cash cows, with $1.5 billion in backlog. While certification delays caused a hiccup, the G800's April 2025 certification erased doubts.

Why Buy Now? The Risks Are Overblown

Bearish arguments focus on:
- Backlog dip: A 2% drop isn't a death knell—GD's backlog is still 3x the average company's revenue.
- U.S. budget cuts: GD's European diversification and tech dominance in cybersecurity/marine systems buffer against this.
- Tariffs: GD's global supply chain and focus on U.S./European partnerships insulate it better than peers.

The real risk? Missing this entry point. GD trades at 17.8x forward earnings, below its 5-year average of 19.9x. With analysts projecting 9.4% EPS growth in 2025, this is a valuation goldmine.

The Bottom Line: GD is a Bulletproof Buy

The defense sector's ETFs (ITA, XAR) are stuck in a slump—GD isn't. With $88.7 billion in backlog, 28 years of dividend growth, and dominance in submarines, cybersecurity, and advanced aircraft, this stock is a buy at $275.

Action Plan:
1. Buy GD now—aim for $275 or below.
2. Set a price target of $330 (the highest analyst estimate) for 17% upside.
3. Hold for the long haul: GD's backlog and global contracts ensure years of growth.

Don't let the sector's noise scare you. GD is built to win—and investors who act now will be laughing all the way to the bank.

Final Verdict: Buy General Dynamics (GD). This is a war you can't afford to lose.