Late last year, I recommended a specific defense company. And if you took my advice, youâre already sitting on gains of about 20%. But donât worry if you missed out⦠There are still opportunities for you to profit here. For a transcript of this video, see below. This transcript has been lightly edited for length [â¦] Youâre receiving this email as part of your subscription to Andrew Zatlinâs Moneyball Daily [Unsubscribe]( [Moneyball Daily] Twenty-Percent Gains in Three Months â Did You Capture Them? February 20, 2024 Late last year, I recommended a specific defense company. And if you took my advice, youâre already sitting on gains of about 20%. But donât worry if you missed out⦠There are still opportunities for you to profit here. [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. Twenty-Percent Gains in Three Months â Did You Capture Them? The International Institute for Strategic Studies just released its 65th annual report on global military-spending. OK, itâs not exactly a page-turner. But it did reveal that defense-spending soared to a new high â $2.2 trillion last year. Thatâs a $200 billion increase from 2022. Experts believe this level of spending is going to continue throughout 2024. In fact, it may even set another record. The question for investors like us is: how do we profit from all this spending? The Need for Military Spending Across the world, military spending makes sense. After all, much of the world is locked in conflict. Russia and Ukraine continue to wage war. Flareups are dotting Africa and the Middle East. And China is increasing its aggression toward its closest neighbors (Taiwan and Japan, for example), prompting them to ramp up military spending. All this turmoil is creating tens of billions of dollars in revenue for U.S. weapon makers. Why? Because 40% of global military-spending goes to U.S. companies. And another 17% goes to members of NATO (North Atlantic Treaty Organization). Essentially, close to 60% of military spending ends up in the West. And as I pointed out, this spending doesnât appear to be slowing down. Now, at first blush, youâd expect that this historic spending would be fantastic news for defense companies⦠And that the increase in revenue would undoubtedly be translating to a rise in these companiesâ stock prices. Not so fast⦠Spending is Up, But Prices are Down Take a look at the recent stock performance of a few notable defense companies. First, thereâs Lockheed Martin (LMT): Next, thereâs RTX, formerly Raytheon Technologies (RTX): Then thereâs Northrop Grumman (NOC): All three companiesâ stock prices are lower today than they were a year ago. Whatâs going on here? Iâll answer that question in a moment⦠But let me be clear that this isnât the case for all defense companies. In fact, Huntington Ingalls Industries (HII), the largest military-shipbuilding company in the U.S., has been on a tear lately: This company may sound familiar to you. We recommended it in early December. And since then, its stock is up about 20%. So, what separates HII from the others? Itâs All About the Hiring The answer is hiring activity. Take a look: In recent months, Huntingtonâs hiring has ramped up significantly. But as youâll see, that hasnât been the case for some of its competitors. For example: Hiring at Northrop Grumman is down. And itâs a similar trend at Lockheed Martin: I want to focus on Lockheedâs situation for a moment⦠Put This on Your Radar If you notice, hiring at Lockheed trended up last summer very briefly, before continuing to fall to close out the year. Last fall, Congress was preparing to vote on a new spending package for Ukraine. And Lockheed was anticipating this new package being passed, and a flood of new contracts and revenues to come pouring in. The thing is, that spending package never saw the light of day. So the wind was taken out of Lockheedâs sails, and hiring dropped to end the year. If thereâs a bright side, itâs that Lockheedâs hiring appears to have flattened out. Yes, hiring isnât booming at the company. But itâs leveled off, showing signs that a turnaround might not be far behind. Lockheed is the maker of the HIMARS rocket launcher, a popular piece of equipment sought by foreign militaries. The company recently announced that itâs ramping up production of this launcher. And this could be the type of announcement that puts this stock back on our radar. In the meantime, letâs continue to let hiring-data guide our way. In it to win it, Zatlin out. In it to win it, [Andrew Zatlin] Andrew Zatlin
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