Wartime: Stocks that Benefit
With the recent terrorist attack in Paris and speculation that more attacks are to come throughout Europe and the US, many are wondering if the world is on the precipice of a new major military conflict. From an investor’s perspective, it begs the question, “what are some stocks that do well during wartime?”
Here are a few that I think could be interesting.
I’ve listed these in the order in which I would recommend buying them. Looking back at 2001, when the attack on the World Trade Centers happened and in the months following RTN, GD, NOC, and LMT all did very well. UTX and BA did not do well. Those two fell along with the rest of the market as the economy was in recession from bursting of the technology bubble. For that reason, BA and UTX would not be my first choice. TDG was not publicly traded at the time.
As far as just looking at the financial statistics, TDG is the fastest growing, but because it wasn’t around during the last major terrorist attack and because it balance sheet has more total debt than total assets, it is listed further down. LMT has somewhat poor financial statistics. The high price to book ratio and the high debt to equity indicate that they also have a much higher debt load than many of the companies. Also, their net profit margin is on the low end of the group. So, although I think LMT would do well during wartime, I like the top 3 companies more because of the strength of their financials.
The performance of these stocks on November 16th, after the weekend news from Paris, I think gives a unique insight and preview as to what […]
Sectors of the Month – Dec 2015
Sectors of the Month – December
Going into December, we recognize that the current state of the market is one of the more difficult ones we’ve seen in a while for managing risk. Some areas of the economy continue to perform well, but enough macroeconomic data has been soft and the potential for changes in fed policy have the potential to cause a lot of downside risk during a time of year when the stock market tends to perform well. So, we are in the market but with a cautious eye to exit quickly if price deteriorates.
The three key sectors we’re focusing on this month are Technology, Industrials, and Insurance.
This is the area that looks the strongest to us right now. Whether it’s Internet, Semiconductors, Software, or Hardware – every area of the Technology space has been among the best performers over the last 3 months. We’re investing in XLK, which is a broad representation of the Technology sector. Technology has become so integral to our everyday lives and each year contributes to so much of the growth of our economy, we believe these are the companies people will more likely want to own regardless of the state of the economy.
Many of the larger holdings in the Industrials sector are in Manufacturing, Defense/Areospace, and Transportation. In particular, we think that conditions could favor the Defense and Transportation elements of this sector. The strong dollar and weak oil prices tend to bolster airlines because the strong dollar makes it more affordable for American to travel internationally and the low fuel costs helps improve the profit margins of the airlines. The increasing conflict in the Middle East and other parts of the world makes it likely […]