Which Defense Stocks Should You Buy?

Which Defense Stocks Should You Buy?

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Which Defense Stocks Should You Buy?

Which Defense Stocks Should You Buy?

By www.Options-Trading-Education.com

As Russia flexes its muscles again and terrorists reach out from the Middle East to kill civilians in the West the world has become a more dangerous place. For investors and traders the question is which defense stocks should you buy or place call options on? Fortune suggests their 5 best defense stocks for right now.

[S]ince taking office, Trump has become a powerful ally of the Boeings, Lockheeds, and Northrop Grummans (noc, -0.81%) of America, contractors that are also among the largest U.S. manufacturers and biggest taxpayers.

Boeing is up 31% and the aerospace and defense index has risen 21% since Trump’s election.

“We’re in the early innings of a defense up cycle,” says Jason Adams, an aerospace and defense analyst at T. Rowe Price, who has recently been making the rounds to clients explaining why the asset manager is currently overweight in the stocks.

Which defense stocks should you buy if in fact we are going to see more defense spending? Here are Fortune’s five picks.
• Raytheon
• Booz Allen Hamilton
• Lockheed Martin
• Boeing
• Honeywell

What all of these companies have in common is the ability to produce advanced technology in the form of part of or entire weapons systems, cyber systems and the like.

Signed Contracts with Foreign Buyers

When Trump visited Saudi Arabia he signed 0 Billion worth of arms deals with the Saudis. Which defense stocks gain from these deals? Zacks.com reports.

President Trump has an attractive return gift for the U.S. defense contractors from his inaugural foreign trip. On May 20, Trump signed an arms deal worth 0 billion with Saudi Arabia. The agreement, with a potential value of 0 billion over 10 years, will take effect immediately.

The winners are Boeing, Lockheed Martin and Raytheon. And signed contracts with the Saudis are probably a better indicator of which defense stocks you should buy than guesses as to whether or not congress will go along with increases in defense spending here at home.

Who Else Will Benefit?

When a company like Lockheed Martin builds the joint strike fighter they subcontract much of the work according to Investor Place. They discuss under the radar defense stocks to buy.

There are Pentagon contractors that supply every item imaginable to the military, including toilet paper. Nonetheless, given the Trump administration’s plan to significantly ratchet up defense spending, the rising tide will lift both well-known and “under the radar” contractors.
Under the radar suppliers mentioned by Investor Place include the following.

• L-3 Technologies
• FLIR Systems, Inc.
• CACI International Inc
• Orbital ATK Inc
As with all stocks it is important to understand the fundamentals that drive the business. Defense contractors that make commercial products as well are often a better long term bet because they are less subject to the highs and lows of defense spending. Because purely defense stocks are cyclical they are often profitable for options traders who learn the specifics of how these stocks rise and fall.

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