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Defense Stocks for a New Nuclear Era
The USA is about to exit a Reagan Era nuclear weapons treaty with the Russians. This could set off another arms race in weapons of mass destruction. It could also provide profitable investments for defense stocks in a new nuclear era. Zacks suggests two defense stocks to buy if we end up in another nuclear arms race with the Russians and Chinese.
President Donald Trump has decided to withdraw the United States from the landmark nuclear weapons deal signed with Russia in 1987 that banned both nations from owning, producing and test-flying nuclear missiles.
While Trump’s recent decision may not be a welcome move for Russia, it could be a new chapter for domestic defense companies in terms of developing nuclear weapons. Therefore, it might be a good idea to invest in some defense stocks that stand to benefit the most.
The basis of Trump’s move is that Russia appears to be violating the agreement and China is not part of it. Like the prospect of a permanent trade war, this move may have more to do with national defense than with anything else.
The stocks that Zacks suggests are Northrup Grumman and Raytheon.
Northrup Grumman makes advanced products and provides high tech services for intelligence, logistics, reconnaissance, cyber operations, and autonomous systems. They produce, upgrade, and maintain the country’s Minuteman III ICBM force. Their stock is likely to grow 27% by the end of 2018.
Raytheon also has a strong foothold in the high tech world of products and services with military applications. Their focus is largely on integrating high tech solutions and providing advanced services. They are currently partnering with Lockheed Martin to upgrade US nuclear deterrent capabilities with more advanced designs and capabilities. Their earnings will grow by about 30% during 2018.