Defense: Four Ways to Invest in Unrest

10/28/2016 10:00 am EST

Focus: INDUSTRIALS

Jim Powell

Principal Analyst, Global Changes & Opportunities

Jim Powell, editor of Global Changes & Opportunities Report, looks at some favorite stocks in a variety of defense sector plays, including personal defense, anti-terrorism, military and cybersecurity.

Increasing crime and urban unrest are big concerns, both for our investments and our personal safety.

Taser International (TASR) – a personal defense stock -- is not only the global leader in less-lethal weapons, it is the single best police supply company.

The firm is expanding into body and dashboard cameras that police departments are buying in record numbers.

Police are determined to reduce lethal encounters and provide video evidence of their public contacts.

Closely related to increasing global and urban tensions, is rising terrorism. Picking the single best anti-terrorism investment is difficult. However, I think OSI Systems (OSIS) has the most potential.

OSI Systems makes detection equipment that helps keep attackers and their materials from entering the country.

Meanwhile, our leading defense stock holdings are looking increasingly attractive due to rising global tensions.

If you only wish to own one defense stock, I believe it should be Lockheed Martin (LMT). The company has the broadest exposure to the Pentagon’s expansion plans.

Cyber-defense is also a multi-billion-dollar industry that should grow rapidly for many years. The government and most companies have fallen behind the cyber threat, and must spend billions to catch up.

My top recommendation in the sector is the PureFunds ISE Cyber Security ETF (HACK) that tracks the industry’s 35 leading companies.

The fund is up an astonishing 40% since mid-February, which shows that the price of diversity doesn’t need to be mediocre performance.

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By Jim Powell, Editor of Global Changes & Opportunities Report

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