The market is on edge. Iran is lobbing missiles at Israel. A crippling port strike threatens to slam the brakes on the US economy. An extremely contentious Presidential election just weeks away. If you're like most investors, you're probably wondering where to find safety in these uncertain times.
But amidst all this doom and gloom, there’s an opportunity emerging – a sector that thrives on global uncertainty and political instability.
I'm talking, of course, about defense stocks.
As our nation prepares for the upcoming election and faces down the threat of escalating conflicts, demand for military hardware and security solutions is soaring. And smart investors like Karim Rahemtulla, Bryan Bottarelli, and Chris Johnson are already positioning themselves to profit.
Here are three defense stocks they believe are poised for explosive growth in the months to come:
DFEN (Direxion Daily Aerospace & Defense Bull 3X Shares)
If you're looking to make an aggressive bet on the defense sector, DFEN is the ETF for you. This is a levered exchange-traded fund that seeks to deliver three times the daily performance of the Dow Jones U.S. Select Aerospace & Defense Index. It holds a basket of leading defense contractors like Boeing, Lockheed Martin, Raytheon Technologies, and Northrop Grumman.
Karim Rahemtulla, the expert mind behind Money and Markets, believes that DFEN could see massive gains as the global security situation deteriorates. He points to the ETF's 2x leverage as a key factor, arguing that it will amplify gains as investors flock to defense stocks in response to events like Iran's missile attacks on Israel.
A word of caution: Leveraged ETFs like DFEN are not for the faint of heart. Their amplified returns also mean amplified risk. But if you're looking for a high-octane play on the defense sector, DFEN is a stock to watch.
COST (Costco)
Costco? The retail giant? What's that got to do with defense?
Well, as Chris Johnson pointed out in his recent analysis of Costco's latest earnings report, the company's management noted a surprising trend: “The insatiable demand for gold bars and silver bullion continued in Q4.”
Now, what does the surging demand for gold have to do with defense stocks? It's a clear sign that investors are nervous about the future. And when investors get nervous, they traditionally move their money into safe-haven assets – like gold and defense stocks.
If you think the world is headed for a rough patch in the months to come, then COST's gold sales should be a clear signal to take defensive action. Add this under-the-radar defense play to your watchlist right now.
AXON (Axon)
With social and political division at a fever pitch, law enforcement and security solutions are more important than ever. And Bryan Bottarelli, head trader at Monument Traders Alliance, believes that AXON, a leading provider of TASERs and body cameras, is poised for massive growth in the coming months.
He's not alone. As social unrest becomes increasingly common, many investors are recognizing that companies like Axon are providing essential services. Bottarelli argues that this will lead to higher demand for AXON's products as security budgets increase, making it a top pick for investors looking to profit from the unfortunate reality of our increasingly chaotic world.
The Bottom Line
The world is a volatile place right now. But there's always opportunity in chaos. If you're smart, you can use that volatility to your advantage and turn fear into profit.
Defense stocks offer a powerful way to do just that. And these three stocks – DFEN, COST, and AXON – are on my watchlist right now.
