A New War Creates a Fresh Opportunity for These Defense Stocks

Well, there it is…

I’ve been saying for the past year that Trump would attack Iran in his biggest interventionist gambit yet — and over the weekend he did just that.

The market doesn’t seem to like it, as major indexes immediately began bleeding in pre-market trading.

That’s understandable.

The war with Iran further complicates things for investors who were already struggling to balance their fears and optimism regarding AI, tariffs, and monetary policy.

As a result, precious metals, which have been roaring on safe-haven demand, are the immediate winners.

Oil prices accrued some fresh momentum, as well. That only makes sense given the energy assets now at risk in the region, including vital shipping lanes that could now be jeopardized.

And then we have defense contractors — all which stand to benefit from this conflict to some degree, even if they’re not directly involved.

For one thing, U.S. defense spending is already gargantuan.

It topped $1 trillion for the first time this past year, and now President Trump is calling for another massive 50% increase to $1.5 trillion.

Furthermore, as I pointed out just before this latest war kicked off, these operations tend to be costly, even if they don’t last that long.

Consider that last year, when the United States responded to Iranian proxy groups assailing regional shipping lanes, it did so at a cost of more than $1 billion in just a month’s worth of action.

That was the cost of more than 2,000 bombs and missiles being fired, seven drones getting shot down, and two F/A-18 Super Hornets tumbling off of an aircraft carrier.

Meanwhile, the strike on Iran’s nuclear facilities (Operation Midnight Hammer) is estimated to have cost roughly $700 million.

This is already shaping up to be a much more serious and expansive operation.

The Trump administration has not been clear about its goals, but the president seems to envision the rosiest of outcomes.

That would be one in which Iran’s current regime is toppled and replaced by a government that’s more accommodating to the U.S.

In this version of events, Trump is feted as a liberator, and Iran’s new leadership is so grateful for America’s intervention and so intimidated by its military capabilities that it opens itself up to U.S. oil interests.

Indeed, I think Trump aims to take control of Iran’s oil resources the same way he attempted to seize Venezuela’s.

But I’ll tell you right now that’s not terribly likely.

What’s more likely is a protracted conflict that drains America’s military resources and creates a power vacuum that further destabilizes the region.

After all, that’s what happened in Iraq.

The Bush administration achieved what they thought was a clear and immediate victory by overthrowing Saddam Hussein.

But in reality, the military operation backfired over the long term. It simply paved the way for Iran to seize control of its chief rival and make it a cornerstone of its regional proxy strategy.

Additionally, the security vacuum created by the U.S. invasion triggered various insurgencies, including ISIS.

So what looked like an immediate truly became a long-term failure.

The assassination of Ayatollah Khamenei could create a similar situation.

In fact, Khamenei’s death might not even have that big of an impact.

Iran’s supreme leader was already 86 years old, sick, and planning his succession. He’ll likely be succeeded by another party hard-liner — not a new U.S.-friendly proxy.

Iran has also been preparing for this conflict for the past year — full well knowing that Trump wasn’t serious about striking a deal.

Iran has been importing weapons from Russia and China, fortifying key military facilities and nuclear sites.

That means rooting out the country’s political regime, eliminating its nuclear program, and forcing the country to capitulate is going to take more than simply killing its octogenarian leader.

If that really is the goal, the war could last a lot longer than Trump might think.

And it will be a drain.

Like said, the United States dispatched more that 2,000 bombs and missiles in just one month of fighting Iran’s proxy groups last year.

Those munitions were already in short supply because so many were sent to Ukraine and Israel. Now more are being expended to bomb Iran into submission, while interceptors are being burned in defense of America’s military assets and those of its allies.

And while America lost two F/A-18 Super Hornets in last year’s conflict, three F-15E Strike Eagle fighter jets have already been shot down in this one.

All of this is to say that this is yet another massive opportunity for the defense sector.

America’s arsenal was already in a difficult position, having been not only drained by persistent conflict in the Middle East and Europe, but also hamstrung by defense contractors’ inability to meet demand.

Now the already towering backlogs of those companies will climb even higher.

Specifically, investors should target the likes of  RTX (NYSE: RTX), General Dynamics (NYSE: GD), Northrop Grumman (NYSE: NOC), Lockheed Martin (NYSE: LMT), and Huntington Ingalls (NYSE: HII).

RTX and Lockheed Martin make a lot of the rockets, missiles, and interceptors that are being expended at such an extremely high rate. That includes the Patriot missile, which is in extremely high demand right now.

Northrop Grumman has become the de facto pointman on some of the Pentagon’s biggest projects, including the Sentinel program, which is replacing America’s out-of-date ICBMs.

HII is America’s largest shipbuilder and key to America’s maritime dominance.

All of these stocks will see stronger returns as a result of this war.

And if you want to get in on some real highfliers, be sure to check out my report on President Trump’s AI Victory Plan.

It details some of the smaller cutting-edge defense tech companies that will completely redefine warfare in the years ahead.