Putin’s invasion of Ukraine was a wakeup call for European leaders who didn’t think he would take such drastic action. Now they know better, asserts Jim Powell, editor of Global Changes & Opportunities.

Europe’s leaders also know they probably could not stop Putin if he launched an attack on their territory. That’s particularly true since Putin would be unlikely to take on all of NATO.

Putin learned from his invasion of Ukraine — that European nations are unlikely to come each other’s defense if he launches a limited war that, in his words, is only to “liberate regions with large Russian populations.” That list would include Estonia, Lithuania, Latvia, and Moldova.

Whatever the future may hold for Europe, the 30 members of NATO are planning to greatly increase their spending on defense. The expansion will include purchasing advanced US aircraft and weapons. However, European countries will buy most of what they need from European defense suppliers. BAE Systems, PLC (BAESF) is first on that list.

BAE is a British-based multinational aerospace and defense contractor that rivals General Dynamics (GD) for the scope of its military products. BAE is the largest defense contractor in Europe – and the seventh largest in the world.

The company is one of the largest suppliers to the US military, to NATO, Australia, Canada, India, Saudi Arabia, Turkey, Qatar, Oman, and Sweden.

BAE is also an important US defense contractor. In addition to operating under its own name, in 1999 BAE acquired United Defense and Armor Holdings in the US that produces military vehicles and armored systems. Other acquisitions gave BAE leading positions in many other military technologies.

BAE Systems is involved in several major defense projects, including the Lockheed Martin F-35 Lightning, the VTOL Harrier, the Eurofighter Typhoon, various types of submarines, armored vehicles, artillery systems, naval guns, missile launchers, precision guided weapons, and the Queen Elizabeth-class aircraft carriers — to name only a few.

Ordinarily, I don’t recommend investing in European companies because the region’s socialist governments have too great a hand in how they conduct business. In this case, however, the war between Russia and Ukraine is turning the business/government connection to an advantage. Every country in NATO will turn to BAE Systems to upgrade their defense capabilities.

BAE Systems has an added attraction for US investors — it isn’t as well-known over here as our “Big Four” defense contractors. However, I think the oversight will end as profits at BAE Systems begin to rise. I think the stock will become an excellent performer for US investors.

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