Every Dollar You’ll Make in the Next 10 Years is on This List
When I started Total Wealth Research, I highlighted six “Unstoppable Trends” for you and told you that “every dollar you’ll make in the next 10 years is on this list.”
Not literally, of course, but figuratively.
The Six Unstoppable Trends we follow – Demographics, Scarcity/Allocation, Medicine, Energy, Technology and War, Terrorism, & Ugliness – are all driven by trillions of dollars that will get spent practically no matter what happens in the years ahead.
Lining your money up with ’em is the single easiest and most powerful path to profits.
Trade wars… they become somebody else’s concern!
Politics… not your worry!
Market corrections… so what!
I know that’s hard to accept and even harder to rationalize, so let me put it this way using an old saying you may be familiar with… “a rising tide raises all boats”
Unstoppable Trends are a lot like the tide. Most investors concentrate on the boats – meaning individual companies – with no awareness of what the tide is doing. So, not surprisingly, they’re caught when they go aground or collide with an unseen obstacle just beneath the waves.
But get the tide right before you pick your boat?
Now you’re going to have a great (and very profitable) sail.
There isn’t a day that goes by without hearing about the latest Chinese weaponry, including electromagnetic railguns and an operational stealth fighter, called the J-20, that is years ahead of U.S. efforts. Or, hypersonic Russian missile delivery systems, artificial intelligence (AI), and satellite weaponry we can’t counter.
In fact, the technologies are such game-changers that the RAND Corporation (an American nonprofit global policy think tank) actually recommended all three nations – the U.S., China, and Russia – deliberately hinder proliferation, least itchy trigger fingers start a world-wide war.
Global defense spending, like the tide, is rising. Total spending may jump to more than $2 trillion within the next few years, and the bulk of that will not be in the Euro-Atlantic region. It will come from China and Russia, which may account for as much as 20% of total worldwide spending, according to calculations I’ve made based on data from the SIPRI Arms and Military Expenditure (AMEX) programme.
It’s easy to understand why, against this backdrop, Thomas Karako, director of the Missile Defense Project at the Center for Strategic and International Studies, told CNBC in April this year, “there’s no time like the present to modify our current missile defense posture.”
And, I agree.
The Russian weapons platforms are particularly troublesome because they reportedly have on-board counter measures capable of defeating even the most advanced U.S. and European missile-defense systems. That is, U.S. missile defense systems can hit ’em in the first place.
Russian President Vladimir Putin claimed during a March 2018 State of the Nation address that the Avangard missile system can travel at 20X the speed of sound and that it’d already entered serial production, meaning Russia is on track for deployment in 2020.
On April 4 of this year, Air Force General John Hyten spoke bluntly to the Senate Armed Services Committee noting that the U.S. doesn’t have “any defense that could deny the employment of such a weapon against us.”
The President, of course, didn’t take any of this sitting down. He penned his approval to a monster $717 billion top line military budget on August 13 that not only highlighted major capital defense items, but also $11.5 billion in missile defense funding.
I don’t think that’s enough, though.
Everybody I’ve consulted during the course of my research into defense-related investment opportunities shares one critical conclusion… the U.S. cannot presently defend itself or its allies anywhere in the world against either the Chinese or Russian hypersonic systems and related technology.
But – and this is the important part – the U.S. will try.
I think the $11.5 billion in funding that’s presently earmarked for missile systems gets doubled or possibly even tripled within the next three years. Factor in related spending in other earmarks – meaning AI and digital defense – and I think we may be ultimately talking $100 billion in ancillary funding that’s tied into what we call “missile defense” today.
That means a compliment of at least one, but probably four, integrated weapons systems.
Any technology we develop will have to include space, sea, land, and air-based integration, which works under a wide variety of conditions via a single, artificially intelligent command structure that has yet to be created.
The best way to play that is a company that I’ve recommended for years, Raytheon Co. (NYSE:RTN).
Raytheon is obviously a household name and a stock that’s already appreciated 235.5% over the past decade, so many investors think its upside is limited.
Not so fast.
I think Raytheon doubles again from where it’s trading today because of new and ongoing missile defense contracts and the related technology that makes it one of America’s top defense contractors.
There’s also Lockheed Martin Corp. (NYSE:LMT), which I’ve also recommended several times over the years.
It’s up a healthy 181.1% over the past decade and is a front runner in the defense against hypersonic weaponry. Many investors also mistakenly believe this company is played out and that’s what’s going to work against them, given the hypersonic scenario we’ve just talked about.
Lockheed could double, too.
The “Catch Up” Play in Defense
Then there’s Northrop Grumman Corp. (NYSE:NOC).
The company has risen 327.8% over the past ten years but dropped back to near $300 a share from a peak of $360.88 earlier this year. That’s a level last seen this time last year and a real bargain at the moment.
The company recently topped guidance and net income when it reported EPS of $3.85 per share on sales of $7.1 billion in Q2. At the same time, it raised full-year guidance to a range of $16.60 to $16.85 from $16.20 to $16.45.
I think that will ultimately prove conservative, and I am particularly focused on the earnings impact from the $4.1 billion Orbital ATK acquisition cleared by the FTC on June 5.
Orbital, if you recall my remarks at the time, makes missile defense and satellites while also having a rocket launch contract to resupply the International Space Station – ISS for short. Importantly, Northop and Orbital ATK are both subcontractors to a primary missile defense contract led by The Boeing Co. (NYSE:BA).
Buy Northrup Grumman now because it’s the one stock ideally positioned to play “catch up” in a world where there could be deadly consequences for any nation that doesn’t get on board… and soon.
More sophisticated investors may wish to consider the NOC January 18, 2019 $290 Call (NOC190118C00290000) options which allow you to control a comparable amount of shares for far less money. Or, consider a bullish put spread like the NOC January 18, 2019 $290/$280 Put Spread (simultaneously buy-to-open NOC January 18, 2019 $290 Put and sell-to-open NOC January 18, 2019 $280 Put) which provides a measure of stability, should the bull take a breather.
I will be with you every step of the way.
And, of course, I’ll also be back with another Unstoppable Trend update in the near future.
In the meantime, I just shared my take on a special missile defense stock that my colleague, Michael Robinson, picked up on as well. He’s prepared a special presentation on the small company that could be at the forefront of the hypersonic technology we just talked about. It, too, could be a really profitable buy to savvy investors – so you should learn how to latch on now. Just click here for more information.
Until next time,