Editor's note: The U.S. is getting more vulnerable by the day...

We boast some of the world's most powerful and advanced weapons. But our military still faces a stockpile shortage. Between the war in Iran and supply bottlenecks, our munitions inventories are rapidly dwindling.

And that translates to plenty of work for defense contractors.

In today's Masters Series, adapted from the September 22 issue of the free Altimetry Daily Authority e-letter, Joel Litman – chief investment officer at our corporate affiliate Altimetry – details why defense companies are practically guaranteed to be working for the U.S. government – whether another war strikes or not...

The Pentagon's Shelves Are Emptying Fast

By Joel Litman, chief investment officer, Altimetry

The U.S. spent years stockpiling some of the most sophisticated weapons on Earth...

This includes Patriot interceptors, Tomahawk cruise missiles, and Terminal High Altitude Area Defense ("THAAD") interceptors. These high-end weapons are designed for difficult missions – from knocking ballistic missiles out of the sky to striking targets hundreds of miles away.

Unfortunately, the war with Iran is showing just how quickly our inventories can vanish... The military has already burned through much of its existing supply of certain missile types fighting in this conflict.

Complicating matters, military planners have been warning for years that a major showdown with China could exhaust important weapons stockpiles within a few weeks. The Iran war has now reduced the amount America would have available going into another conflict.

That changes the way America needs to think about defense spending...

Today, we'll show just how quickly America's most important munitions are being depleted... and explain why rebuilding our inventories could support defense suppliers for years.

Our munitions stockpiles are dwindling...

Years of effort to build up critical weapons supplies can disappear surprisingly fast when demand surges.

Estimates suggest the U.S. may have consumed more than half of its Patriot-interceptor inventory during the Iran war.

America spent much of the past decade steadily accumulating these missiles. Our supply grew 17-fold between 2015 and 2025. Then, in a short period, wartime demand erased a huge portion of that progress. Take a look...

At this point, fewer than half of the missiles remain. And Patriots are only one part of the story.

Our military may have also used roughly one-third of its global Tomahawk-missile inventory and around 40% of its THAAD interceptors. Stockpiles of some smaller, newer missiles are in even worse condition.

The U.S. is using munitions faster than factories are making them...

A military can absorb heavy usage for a short period... if it can replace what it uses. The challenge here is that replacement happens on a completely different timeline.

These weapons rely on specialized components and tightly controlled manufacturing processes.

That means a missile can be used up in minutes... while replacing it can take months or years.

For example, replenishing the Patriot inventory is expected to take more than two years. Tomahawk and THAAD stockpiles could remain low for even longer.

The issue is, the U.S. can't let its adversaries think its munitions reserves are depleted...

After all, if enemy nations believe America is vulnerable, they may be more likely to strike.

That creates an unusual kind of demand...

Normally, the Pentagon plans ahead to make sure it has enough weapons for future needs. But with its munitions stockpiles being used as quickly as they are, it needs to plan even further ahead. That's why the Pentagon has already committed billions of dollars to buying more weapons and expanding production.

Just last month, it signed a nearly $23 billion contract with RTX (RTX) to make more Tomahawk missiles.

All told, defense companies now have a better idea of what the Pentagon will need to begin rebuilding its stock. And even if the conflict with Iran ends tomorrow, they can continue to profit for years as America works to replace the weapons it has used.

The U.S. has spent years debating how large its defense budget needs to be...

But when we're depleting arms at such a rapid rate, the hypothetical doesn't matter. We could run out of missiles if we don't do something – and fast.

A significant amount of expensive military hardware has already left the shelves. Replacing the stock will take years at current rates.

That gives defense suppliers more certainty that they'll have the government signing contracts in the coming months and years.

The rebuilding process has already begun... and it's only going to grow as the U.S. uses up more of its missiles. If you're looking for somewhere to put your money today, defense companies are a good place to start.

Regards,

Joel Litman

Editor's note: With the U.S. weapons supply drying up, our nation's leaders are scrambling to replenish our military's stock. And with potentially $1.5 trillion about to be spent to make that happen, Joel sees what he says is one of the biggest stock market events in 45 years.

The White House will do whatever it takes – going on a spending spree to restore our inventories and investing in expensive next-generation technologies – to maintain security.

Many companies will receive new contracts from the Pentagon... but only a select few companies have the potential to send your portfolio soaring.