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3 Top Defense Stocks to Buy Now

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The defense industry has experienced quite the boom since President Trump took office. Back in February, he initially unveiled plans to significantly increase federal spending related to national security, stoking a rally in defense stocks. The president is seeking $54 billion to spend on a variety of defense-related systems

Then there’s the multi-billion-dollar arms deal reached in May with Saudi Arabia. The transaction was a way to both improve a decades-long alliance with the world’s largest oil exporter, as well as potentially lead to additional sales to other countries in the region. Defense giants like Lockheed Martin (LMT - Free Report) —whose technology was part of the agreement—Boeing (BA - Free Report) , and Raytheon (RTN - Free Report) will all likely benefit.

As defense stocks and funds like the iShares U.S. Aerospace & Defense ETF (ITA - Free Report) continue to gain this year, let’s take a look at three top picks for your portfolio.

Curtiss-Wright Corp. (CW - Free Report)

Curtiss-Wright is a global diversified product manufacturer and service provider for the commercial, industrial, defense, and energy markets. Headquartered in Charlotte, North Carolina, the company was once the largest aircraft manufacturer in the U.S., but now specializes in actuators, aircraft controls, valves, and surface treatment services.

The company is a #2 (Buy) on the Zacks Rank, and growth projections for 2017 look promising. Curtiss-Wright expects earnings to gain 6.9% for the current year, with one positive analyst revision in the last 60 days compared to none lower for both time frames. Sales are expected to grow 4.39% in the same time frame. Its industry, Aerospace-Defense Equipment, sits in the top 40% of all industries ranked by Zacks, and has returned 15.21% so far this year.

Curtiss-Wright has beaten earnings expectations in the last four consecutive quarters, and has an average earnings surprise of 5.11%. The company is set to report its next quarterly earnings on July 26 after the bell.

Northrop Grumman Corp. (NOC - Free Report)

Northrop Grumman provides innovative solutions in systems integration, defense electronics, and information technology for the U.S. and international militaries, government and commercial customers, as a prime contractor, principal subcontractor, team member, or preferred supplier. Northrop is headquartered in Falls Church, Virginia.

Sitting at a #2 (Buy) on the Zacks Rank, Northrop has started off strong in 2017. Both its earnings and revenue figures for the first quarter surpassed the Zacks Consensus Estimate, and it looks like the rest of the year will continue to see improved growth. Northrop expects year-over-year earnings growth of 11.92% for the current year, and sales growth of about 3.3% for the same time frame; one analyst revised their earnings estimate upward in the last 30 days compared to none lower.

Northrop’s industry, Aerospace-Defense, is in the top 35% of all industries ranked by Zacks, and has returned by 21.32% year-to-date. The company also has a history of beating expectations, soaring past consensus estimates over the past four consecutive quarters. The defense contractor has an average earnings surprise of almost 11%. The company is set to report its next quarterly earnings on July 26 before the bell.

Rockwell Collins Inc.

Headquartered in Cedar Rapids, Iowa, Rockwell Collins is a world leader in providing aviation electronics and airborne and mobile communications products and systems for commercial and military customers. For example, Rockwell helps pilots safely and reliably navigate far distances; keep warfighters aware and informed in battle; deliver millions of messages for airlines and airports; and help passengers stay connected and comfortable throughout their journey. 

While sitting at a #3 (Hold) on the Zacks Rank, Rockwell Collins is expected to see positive returns this year. Earnings are projected to grow about 6% year-over-year for the current year, and one analyst has upped their estimate in the last 30 days, compared to none lower in the same time frame. Sales are expected to increase almost 6.7% for the current year as well. Like Curtiss-Wright, Rockwell Collins is part of the Aerospace-Defense Equipment industry.

Looking at its earnings history, Rockwell Collins has beaten expectation in that last four consecutive quarters; the company has an average earnings surprise of 2.45%. The company is set to report its next quarterly earnings on July 28 before the bell.

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