Whether or not you’re UK or US inventory markets, bonds and even crypto, the previous few weeks have seen heightened volatility and costs falling. A few of this pertains to investor concern round President Trump’s tariff proposals. There’s additionally some fear about inflation right here within the UK and elsewhere beginning to rise once more. But regardless of all of this, one FTSE 100 share has been rocketing larger.

Transferring larger, not decrease

I’m referring to BAE Techniques (LSE:BA.). The defence firm has seen a 33% bounce within the inventory price prior to now month. Over a broader one-year interval, it’s up 25%.

There are a couple of key causes for the outperformance towards the gloomy backdrop. In latest weeks, European international locations have dedicated to bolstering their navy expenditures in response to geopolitical tensions, significantly regarding the scenario in Ukraine. This dedication naturally will imply larger spending and new contracts with defence firms on this house. BAE Techniques is energetic in Europe already, so ought to do effectively going ahead, tragic although the scenario is.

Inside this era, the enterprise launched 2024 outcomes. They have been sturdy, with gross sales rising by 14% versus the 12 months earlier than. Underlying earnings earlier than curiosity and tax jumped by 14%. Apart from this, it has a big order backlog of £77.8bn, up £8bn from final 12 months.

This exhibits that there’s already excessive demand and that the enterprise has sturdy momentum. The CEO famous that “based on the exceptional visibility of our record order backlog and sustainability of our value-compounding business model, we remain confident in the positive momentum of our business into the future”.

Route from right here

In periods of market volatility, it’s essential to recollect to determine the causes. In consequence, an investor can determine which shares to keep away from but in addition discover pockets of alternative. Considerations round safety and defence is dangerous for some sectors, however for BAE Techniques, it’s a optimistic.

Tariff woes will impression the agency, because it does have US operations. However this isn’t to the identical extent as some auto or agriculture shares which might be doubtless severely broken by potential implementation of tariffs.

Due to this fact, I believe the inventory can proceed to maneuver larger in coming months. After all, if one other catalyst of issues come up, it may hit BAE Techniques. However primarily based on the explanations for the market fall thus far, it’s not more likely to be dangerous for the enterprise.

Nonetheless, there are dangers concerned. A giant one is the controversial tackle investing in defence shares. Some traders simply don’t really feel snug shopping for shares which might be concerned (even not directly) with warfare. One other danger is that the enterprise may lose floor to the evolving nature of the battlefield. There are different firms centered much more on cyber and tech that might take market share from BAE Techniques in coming years.

Total, if traders are snug having a defence inventory of their portfolio, BAE programs may very well be price contemplating.