The stocks of Rheinmetall, RENK, and Hensoldt have recently gained significantly in value, driven by the escalation in the Middle East, particularly between Israel and Iran. These developments are particularly relevant for investors in the defense sector.
Background and Causes of the Rise
Middle East Conflict
The tensions in the Middle East have led to an increased demand for armaments, driving up the stock prices of defense companies like Rheinmetall. Military spending is rising, and companies in the sector are benefiting from it.
Bundeswehr Demands
In Germany, there are calls for increased military spending. This strengthens the stocks of companies like Rheinmetall, RENK, and Hensoldt, which benefit from additional defense contracts for the Bundeswehr.
NATO Goals
The NATO goal of spending at least 2% of GDP on defense supports the upward trend in defense stocks as they anticipate increased investments in defense.
Current Developments and Forecasts
Rheinmetall: The stock saw a 215% increase in 2025, with a market capitalization rising to 80 billion euros. The price target from UBS is set at 2,200 euros.
RENK: With an increase of 325%, a strong market sentiment is evident. RENK is benefiting from the arms boom.
Hensoldt: Despite the dividend cut, the stock continues its ascent, driven by the overall rally in the sector.
Outlook for Investors
The rally of defense stocks could continue as geopolitical tensions remain. However, investors should be cautious, as volatility may occur due to priced-in gains.