A United States attack on Syria is a scary prospect for most people, but it could mean a huge profit for a handful of defense contractors like Raytheon (NYSE: RTN), which manufactures the powerful Tomahawk cruise missiles.
In response to a possible attack against Syrian President Bashar al-Assad, Raytheon stock prices have skyrocketed, reaching a 52-week high of $77.93 per share earlier in the week. Shares continue to remain high, currently sitting at $75.68.
It’s not hard to see why. Individual Tomahawk missiles sell somewhere around $1 million per missile, and given the fact that a military intervention against al-Assad would almost assuredly involve multiple Tomahawk strikes against key Syrian compounds, Raytheon stands to make tens of millions of dollars in in initial strike alone.
In fact, the possibility of an attack on Syria has some lawmakers hoping to increase the annual order of Tomahawk missiles, whether or not military intervention actually occurs.
“There are many of us who have been concerned for years about maintaining our missile capabilities,” Rep. Rob Bishop (R-Utah), a member of the House Armed Services Committee, explained to Politico.
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This fiscal year, the United States is budgeted to purchase 196 million Tomahawk missiles with a total bill of $320 million, but Bishop says that may not be enough. He’s concerned about possibly running out of missiles and being left unprepared during a needed assault.
“Cruise missiles are heavily used, particularly so often at the start of any conflict, as sort of the way to open the door,” Bishop said. “When you reduce funding or diminish demand in many of these programs, you really endanger the capability to maintain this missile capability at all.”
Others in the defense industry share Bishop’s concerns.
“It’s not like there are huge stockpiles of Tomahawks lying around in a warehouse somewhere,” an anonymous congressional defense source told Politico.
“We have one hot production line that operates at a steady, but modest, capacity out in Arizona,” the source continued. “When we use 50, 100, 150 of these it can create near-to-medium-term shortfalls that may cascade and affect our conventional strike capacity in other theaters.”