Defense! A Military Trio

08/21/2013 8:00 am EST


One of the most promising growth sectors is defense stock, which will benefit from the rising political strife we are seeing throughout the world, observes James Powell, editor of Global Changes & Opportunities Report.

As in Egypt, Libya, and now Syria, conflict surrounding governments that Washington supports, always leads to increased military aid for them, most of which must be spent on US equipment.

I continue to think the US defense stock with the best growth prospects is Lockheed Martin (LMT). The company reported a 10% boost in profits. Management also increased their expectations for the full year.

With two additional F-35 fighter contracts in the works that will eventually cost Uncle Sugar an eye-popping $1.5 trillion, the outlook for more growth is certainly justified. In its role as a strategic provider of military equipment, Lockheed has not been touched by the budget sequester.

A smaller growth stock in the defense sector that is also performing well is Orbital Sciences (ORB), a specialist in the reusable satellite launching systems the Pentagon and NASA are buying in record numbers.

Orbital has the equipment that the military, the CIA, and the NSA need to monitor numerous potential threats that are often widely separated.

Another very promising growth stock with many defense contracts is Alliant Techsystems (ATK).

The company provides the propulsion units that Orbital Sciences uses in its reusable Pegasus rockets that the military prefers for many launches. The company also supplies some of the satellites and components that ORB puts into orbit.

With terrorists now in possession of thousands of shoulder-fired anti-aircraft missiles, taken after the overthrow of Gaddafi, Alliant's effective countermeasure systems also hold great promise.

Indeed, I think billions of dollars will then be spent to equip US aircraft with sophisticated missile defense systems. Tests are already underway.

The company's expanding engineering and technical service capabilities should help keep it on the Pentagon's primary supplier list for many years. I think Alliant Techsystems will be an excellent performer in long-term portfolios.

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