The defense sector has been woefully underperforming. And a look at the data doesnât reveal many positive signs. But I believe this sector is about to rally. Let me tell you why⦠For a transcript of this video, see below. This transcript has been lightly edited for length and clarity. This Struggling Sector is Ready [â¦] Youâre receiving this email as part of your subscription to Andrew Zatlinâs Moneyball Daily [Unsubscribe]( [Moneyball Daily] This Struggling Sector is Ready to Rally January 23, 2024 The defense sector has been woefully underperforming. And a look at the data doesnât reveal many positive signs. But I believe this sector is about to rally. Let me tell you why⦠[CLICK HERE TO LAUNCH VIDEO OR READ THE FULL TRANSCRIPT BELOW »»]( For a transcript of this video, see below. This transcript has been lightly edited for length and clarity. This Struggling Sector is Ready to Rally If I told you I was bullish on the defense industry, you might question my sentiment â and with good reason. After all, defense contractor Lockheed Martinâs stock (LMT) delivered just 1% gains over the past year. General Dynamics (GD) wasnât much better at 7%. In fact, the iShares U.S. Aerospace & Defense ETF (ITA) has delivered returns of just 5% over the past twelve months, while the broader stock market created double-digit gains. Furthermore, I donât see any current data that would make me want to invest in this sector right now. Hiring at major defense contractors, for example, is down. So, why am I still convinced that this sector is ready to rally? Three Reasons Iâm Convinced For starters, demand for military hardware has never been greater. And customer checkbooks are finally coming out. You see, demand coming from Ukraine and Israel isnât shocking. Ukraine has already sucked up more than $100 billion worth of equipment. And it will need to replenish its reserves. Israel needs weapons and equipment, too. But recently, orders from other U.S. allies are starting to line up. Japan, for example, plans to double its $35 billion annual defense budget this year. And itâs likely to turn to American defense companies for the necessary equipment and weapons. Germany is also upping its defense spending. American allies are ready to spend. And thatâll boost U.S. defense companies. The thing is, itâs not just our allies that are eager for American-made products⦠Americaâs Role as the Global Merchant Even some of the more unfriendly nations need weapons. Consider Russia, for example. If the war in Ukraine has taught us one thing, itâs that Russian-made military hardware stinks. Itâs so bad, even Russian soldiers donât want to use it. Russia is looking everywhere for superior products, including places like Iran and North Korea. But interestingly, the U.S. supplies weapons and equipment to countries like these, too. America has become the primary supplier of defense equipment to the world. And later this year, we might have a familiar face running the show... The Militaryâs Biggest Fan Donald Trump is on the move, and he may soon wind up back in the Oval Office. Trumpâs a big supporter of the military. And heâs used his admiration for U.S. troops to take a tough stance when it comes to dealing with foreign powers. Within a month of being elected, Trump tried to block the Nord Stream 2 pipeline, which wouldâve given Russia control of gas distribution throughout Europe. Not long after, he started warning European nations that Russia was going to be a problem, and that it was time to strengthen their defenses. Trump didnât worry too much about threats from foreign nations. Because if push came to shove, he had the biggest, baddest military to step up to the table. Thatâs why I expect Trump to make the military a central campaign theme. Itâs a topic thatâll bring him significant support. Itâs also a topic he can use to attack Joe Biden. Let me explain⦠Trumpâs Goal? Keep Israel in the Spotlight The conflict in Israel is a big blemish on Bidenâs record. Heâs going to try and make it disappear from the headlines as the election nears. Trump, meanwhile, will want the conflict front and center. Why? Because heâs in a âcanât-loseâ situation. You see, the anti-Israel crowd already votes Democratic. So Republicans arenât going to lose any votes if Trump takes a pro-Israel stand. In fact, he may gain some votes from Jewish Democrats who are unhappy with Bidenâs stance on the issue. As Trump takes a seat in Israelâs corner, itâs likely that talk of military intervention â or at least aid â will come up. And that will also be good news for defense companies. Get Ready to Rally I get it â current economic signs suggest the defense sector isnât one investors should be rushing towards. But between increasing demand for weapons, Americaâs position as the global merchant for military equipment, and an election that will keep the military in the spotlight for the foreseeable future⦠Iâm expecting this sector to rally in a big way. And weâre going to be ready to profit from it. Weâre in it to win it. Zatlin out. In it to win it, [Andrew Zatlin] Andrew Zatlin
Moneyball Economics Copyright 2024 © Moneyball Economics, All rights reserved. You signed up on
[]( Our mailing address is:
Moneyball Economics
1125 N. Charles Street
Baltimore, Maryland 21201
[Update Subscription Preferences]( | [Unsubscribe from this list]( | [Terms & Privacy]( RISK NOTICE: All investing comes with risk. That includes the investments teased in this letter. You should never invest more than you can afford to lose. Please use this research for the purpose that it's intended â as research only. You should consult a professional financial advisor before ever taking a position in any securities you see herein. DISCLAIMERS: The work included in this communication is based on diverse sources including SEC filings, current events, interviews, corporate press releases, and information published on funding platforms, but the views we express and the conclusions we reach are our own. As such, this content may contain errors, and any investments described in this content should be made only after reviewing the filings and/or financial statements of the company, and only after consulting with your investment advisor. Actual results may differ significantly from the results described herein. Furthermore, nothing published by Moneyball Economics, Inc should be considered personalized financial advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. Moneyball Economics is an independent provider of education, information and research on publicly traded companies, and as such, it accepts no direct or indirect compensation from any companies or third parties mentioned in any of our letters, reports or updates