A number of defense-industry shares hit new highs yesterday (Wednesday), and may have more room to run, according to a report by the Associated Press. Much of the surge can be attributed to Defense Secretary Robert Gates, who requested and additional $42 billion in funding from Congress to cover expenditures in Iraq and Afghanistan.

The AMEX Defense Index, which tracks the performance of 14 major defense companies, jumped 14.25% in afternoon trading. Since last year the index has climbed 47% while the S&P 500 has only picked up 15%.

Shares of Lockheed Martin (LMT) topped the gainers, climbing 76 cents to close at $105.72. The stock is nearing its all-time high of $107.33, established in July. In the past year, prices have traded as low as $82.70.

Shares of Raytheon (RTN) also collected 75 cents yesterday, closing at $64.47 – and trading as high as $64.51.

According to The AP, CIBC World Market Corp. analyst Myles Walton believes defense spending will remain high in the coming years. In a recent note to clients, he said that the Pentagon is unlikely to experience a reduction in spending in the fiscal 2009 budget, and that the fiscal 2010 budget would be the first opportunity for any drawback in war-related spending. In that case, contractors and financials wouldn’t be affected until at least 2011.