With Trumps stunning victory, investors are quickly reallocating their portfolios to prepare for a Republican president, and a Republican-controlled
Congress as well. While there are a number of areas that look to benefit from this political situation, one that may do especially well is the defense
This corner of the economy could benefit from a massive surge in defense spending, as some believe that Trump will look to spend somewhere near
$500 billion more on defense
, pushing total U.S. defense spending near the one trillion dollar mark. As you might be able to guess, this huge increase is being viewed favorably by the
defense stocks, and we have seen several of these surge following Trumps win. Plus, the industry rank here is in the top 20% overall, so there is plenty
to like in terms of investment choices.
One that might be worth a closer look by investors though, is Northrop Grumman (NOC - Free Report) . This company was
recently upgraded into Zacks Rank #1 (strong buy) territory while it could be a prime beneficiary of the Trump defense spending surge.
But beyond Trump, analysts also seem to like NOCs prospects, as we saw a number of analysts raise their earnings estimates on NOC shares, and that was
before the election took place. In fact, analysts were already baking in a year-over-year earnings growth rate of 27% for Northrop, and that is before
considering Trump's huge spending surge.
But before worrying about these lofty expectations, investors should consider that NOC does a great job in earnings season, and that it has a great history
of beating estimates. This includes four straight beats of at least four percent, and only two misses in the past five years.
If investors add this solid history to rising estimates and a good industry situation, it is hard not to like NOC here, even with the recent jump in
Trump looks to be very good news for the defense industry, at least if he follows through and drives spending higher for the sector. This looks to trickle
down to the many defense contractors in the nation, and really boost their bottom lines in the process.
But beyond that, it is important to consider that there are strong fundamentals for a number of companies in this market, including NOC. The industry rank
is in the top 20%, there have been rising earnings estimates, and the company has a fantastic history in earnings season. So, assuming the Republican wave
pushes through a bunch of spending on the industry, this could be an area to watch and NOC could be a stock to keep on your radar in the near term.
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