Gabelli Likes Lockheed, RTX as Defense Capex Flows Grow

Market Backdrop: A Defense Capex Wave Takes Shape

Investors are reassessing the defense landscape as the Department of Defense signals a sustained, multi-year capital expenditure push across the missile supply chain. The implication: a broad upgrade cycle that could expand beyond the largest contractors to a wide network of component makers, maintenance providers, and precision manufacturers.

Industry data through the end of 2025 point to a sizable backlog resting on the major programs. Lockheed Martin (LMT) carried a record backlog near $194 billion, RTX (RTX) stood at about $268 billion, and Boeing (BA) reported a backlog in the hundreds of billions. The numbers underscore a durable demand backdrop even as the market weighs procurement timing and program cadence against financial performance.

The scale of the capex push is underscored by program milestones, including higher production rates and a wave of modernization across existing platforms. Analysts say the defense budget tailwinds could keep revenue visibility elevated for years, particularly as U.S. and allied budgets seek longer-term stability in an uncertain geopolitical environment.

Gabelli's Three-Tier Thesis

GAMCO’s research team is applying a layered view of the defense cycle. The core remains the big primes, but the real opportunity, they argue, comes from the entire ecosystem a multi-year capex wave touches—and that includes smaller suppliers that frequently fly under the radar.

“The defense budget is translating into a long, multi-year capex wave that touches every layer of the missile supply chain,” said a GAMCO portfolio manager who asked not to be named. “If you’re aiming for durable exposure, you don’t just chase the engines and seekers—you must think about casings, nose cones, and the small firms delivering essential components.”

In the memo, the team notes that a diversified approach can reduce single-program exposure while still capturing the upside from sustained spending. And in a nod to investor sentiment, the firm has highlighted a particular tenor in its positioning: gabelli likes lockheed, rtx. The phrase captures confidence in backlog quality, program continuity, and the prospect of repeat orders tied to maintenance and modernization cycles.

Missile Supply Chain: From Main Engines to Niche Casings

The missile ecosystem spans propulsion, guidance, airframe components, materials, and finished assemblies. A multi-year capex cycle elevates demand across this spectrum, pushing both the scale of contracts and the sophistication of manufacturing needed to meet deliverables on time.

• Engines and seekers remain tight in supply, contributing to longer lead times and pricing discipline as demand grows.
• Non-core components—such as casings, nose cones, and housings—are seeing more robust order flow as programs mature and production lines scale.
• Smaller suppliers with precise machining, quality control, and on-time delivery capabilities stand to gain share as the primes push for capacity expansion and reliability.

Albany International: The Hidden Supplier

Albany International (AIN) has emerged as a potential beneficiary within the broader capex surge. The company produces aerospace components used across weapons platforms and has drawn interest from investors seeking exposure to the supply chain beyond the top-tier primes.

AIN has posted a notable run in 2026, rising about 16% year-to-date and trading around $59 per share. The stock’s move reflects expectations that Albany’s product lines—often focused on specialized materials and precision parts—will see higher utilization as production ramps up for major programs.

Analysts point to Albany’s positioning as a mid-tier supplier with a clear path to expanded volumes without competing directly with the massive, highly integrated primes. In a market where visibility is prized, Albany International’s niche capabilities could translate into steady growth even if program cadence fluctuates across individual platforms.

Market Implications and Investor Takeaways

The current backdrop suggests a multi-year cycle in which revenue visibility is anchored by robust backlogs, diversified programs, and capacity expansion across the defense ecosystem. For investors, three themes stand out:

• Backlog quality matters: Very large, multi-year backlogs at LMT, RTX, and BA imply durable demand but require careful attention to delivery schedules and modernization bets.
• Supply-chain breadth can unlock upside: The flow-through effect from engines and seekers to casings and housings creates potential for gains across a wide set of suppliers, including mid-sized players like Albany International.
• Geopolitics and budgets drive the cycle: A sustained defense posture by the U.S. and allies supports long-term capex, while shifts in budgets could reweight emphasis toward different platforms or components.

From a market standpoint, the defense tilt remains a critical driver of risk and opportunity. The big names — Lockheed Martin, RTX, and Boeing — offer revenue stability through long-term service and modernization contracts, while suppliers along the chain may deliver outsized gains if production scales align with budget inflows. The performance of Albany International offers a concrete example of how a small but essential supplier can benefit from a broader capex cycle, even if its business is less visible to the general investor public.

Because the DoD’s contract assurance is the backbone of this capex wave, investors should monitor not just quarterly results but the pace at which primes convert backlog into revenue and the degree to which suppliers can scale without compromising margins. The risk is that delays in funding, supply constraints, or geopolitical shifts could alter the trajectory. Yet, with a multi-year horizon, the current setup points to a constructive environment for the defense sector—one where both mega-caps and mid-tier components players play a role in a broader growth narrative.

In the coming quarters, the market will assess how well Albany International and similar suppliers translate backlog intake into actual production, and how the primes balance capacity expansion with cost containment. For investors seeking balance and upside, the combination of stable defense franchises and thoughtfully chosen suppliers could offer a compelling risk-adjusted return in a market where uncertainty remains high. After all, the story remains clear: gabelli likes lockheed, rtx as part of a defense-focused portfolio, supported by a wider ecosystem that could extend benefits beyond the marquee names.