BAE Systems (LON: BA) produces arms, security products, and components for use in the aerospace sector. They sell their products globally, particularly to the USA, UK, Australia, and Saudi Arabia. BAE Systems is the largest defence firm in Europe and one of the largest in the world.
The company supplies Typhoon fighters to the RAF, partners in the F-35 Lightning II program, and produces the Hawk jet training aircraft. They also sell land-based armaments such as tanks and troop carriers.
For more about buying shares in BAE Systems, read on for our step-by-step guide.
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Step 1: Choose a broker
BAE Systems' shares are traded on the London Stock Exchange, which your chosen broker must have access to if you want to buy shares in the company. (Those listed above all do.)
There are a variety of fees and features to be aware of when comparing options.
- What commission and foreign exchange fee does the broker charge? This can have an impact on the profitability of smaller trades.
- What stock markets are accessible and what tradable instruments are available? This makes the difference between being able to trade things like international shares, commodities like oil and wheat, etc.
- Is it possible to buy fractional shares? Being able to do so opens up investment in expensive large cap stocks like Amazon (NASDAQ: AMZN)and Tesla (NASDAQ: TSLA).
Step 2: Fund your account
Before you can buy shares, you'll need to deposit funds into your account.
You can fund your account with a bank transfer or debit card. Credit cards can be used to deposit funds with some brokers, although this is not commonly supported.
Step 3: Decide how much to invest
Because the value of share prices can go up or down, it's always a good idea to set a budget for your investment. Decide how much you want to allocate to investing in BAE Systems bearing in mind that having a diversified portfolio gives you some protection from fluctuations in a single company’s share price.
Resist the fear of missing out. You can invest later when you have the funds to do so.
Step 4: Choose whether to buy shares or an ETF
ETFs (Exchange Traded Funds) are a type of investment that takes a position in a basket of companies. They are generally viewed as a lower-risk investment because of their diversified allocation. However, ETFs are not immune to risk.
Shares of BAE Systems are included in various ETFs including iShares MSCI EAFE ETF (EFA), Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU), ETFMG Prime Cyber Security ETF (HACK), and Franklin FTSE United Kingdom ETF (FLUK).
Step 5: Configure an order
A market order is the easiest way to invest in a stock where the broker will buy shares at the next available market price.
Most trading platforms have the option to set up an order that is automatically executed under pre-defined market conditions, e.g. when a share price hits a certain level, you can buy shares or sell out of your position to take profit or protect against losses.
Step 6: Place your order to buy
With your order configured, submit it to buy shares.
Understanding what is likely to change the cost of your BAE Systems shares will help you to decide whether you should buy more or sell out of your position.
Look out for news stories from around the world about spending on armaments in addition to stories about BAE Systems, their products, and what their competitors are doing.
BAE Systems are also acquisitive, but so are their competitors. Mergers and acquisitions — and rumours thereof — plus winning or losing large defence contracts can cause their share price to move.
Their main competitors are Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), General Dynamics (NYSE: GD), Northrop Grumman (NYSE: NOC), and Leonardo (BIT: LDO).
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