Special Report: Trump’s Arsenal: Today’s 3 Best Defense Stocks

The defense sector in the U.S. is never a bad investment. Because when it comes to defense spending, nobody comes anywhere near us.

In 2016, the last year of the Obama administration, the U.S. federal government spent $611 billion of taxpayers’ money on bullets, missiles, tanks, payroll, and everything in between.

China, the next-biggest spender, came in at just over one-third of that with $215 billion.

And Russia, our biggest rival when it comes to arms and arms races, was barely on the radar with a paltry $70 billion committed to defense spending in 2016.

The reason behind this enormous disparity is political. And it goes back to the post-World War II years and the subsequent Cold War.

It has to do with our status as the de facto global cop, a position that the U.S. assumed in the Cold War when it began its crusade to rid the world of communism.

The reasons are irrelevant, but the results are more far-reaching than most understand.

With trillions committed to defense over the years, the resulting inflow of new technologies, materials, and processes has helped to transform the modern world.

Computers, cellular devices, GPS, the internet, and thousands of smaller inventions and improvements are the results of defense research.

So, an investment in one of today’s major defense contractors is also an investment in technology.

These three companies consistently rank within the top five defense contractors by total contract value.

They're responsible for the development and production of some of today’s most cutting-edge, most disruptive war systems...

1. Lockheed Martin Corporation (NYSE: LMT)

Share Price: $321
Market Capitalization: $92 Billion
Government Contract Value 2016: $43.4 Billion

As the biggest of the bunch, Lockheed Martin Corporation is also the main contractor assigned to the legendary F-35 program. The program is projected to cost a total of $1.5 trillion over the course of its expected 55-year run time.

Not accounting for inflation, that sum is the equivalent of 16 times the company’s total market capitalization. And it represents only one of many projects that are currently in the works.

The company is also one of the biggest makers, and innovators, in the unmanned aerial vehicle (UAV), rotorcraft (helicopters), and smart munitions segment.

Because of President Donald Trump’s new policy of developing more effective, smarter airborne systems for the purpose of tackling a potential ballistic missile attack from the Eastern hemisphere, Lockheed will remain a key player in this field for at least the next two generations...

2. Raytheon Company (NYSE: RTN)

Share Price: $206
Market Capitalization: $59 Billion
Government Contract Value 2016: $22.4 Billion

Massachusetts-based Raytheon Company is a more specialized contractor. It primarily develops subsystems and smaller weapon systems in the more experimental fields of the defense industry.

Two of the most exciting technologies spearheaded by Raytheon at the moment are lasers and electromagnet rail artillery.

Both technologies are designed to improve upon traditional ballistic and guided-munition technology. And it does this by unprecedented velocity and accuracy while it keeps costs to a minimum.

For example, Raytheon’s rail gun promises to expand existing naval vessels' artillery coverage by a factor of 20 or more.

The company’s "strike laser," a weapon that's compact enough to mount on aircraft complete with a power source, has already been tested from an airborne apache gunship against a target 1.4 kilometers away. This makes it the first such system to ever be successfully fired from a helicopter.

And Raytheon’s ground-based microwave lasers have already proven capable of engaging many drone-sized targets at the same time.

But the company’s interests go far beyond electric and ray guns. Raytheon is one of the leading firms working on a solution to the ongoing ballistic missile threats posed by some of our best-armed rivals.

Radar is one of the company’s most important core technologies.

As such, Raytheon's development of advanced tracking and kill-systems to defeat extra-atmospheric threats, such as intercontinental ballistic missile (ICBM)-borne reentry vehicles, is considered one of the most important initiatives at the Department of Defense (DOD) today.

With the threat not expected to go away on its own, it will remain a major focus going forward.

Raytheon also operates on the other end of the nuclear dynamic. In 2017, the company captured a $900 million deal for the development of a new nuclear-capable cruise missile...

3. The Boeing Company (NYSE: BA)

Share Price: $338
Market Capitalization: $199 Billion
Government Contract Value 2016: $29.5 Billion

The Boeing Company is unique in this trio because it’s not predominantly a defense contractor.

The company is the world’s second-biggest aircraft producer, after Airbus. But its military branch still accounts for a major slice of the revenue pie.

Boeing’s Defense Space & Security division accounted for 45% of the company’s income in 2011. And this made it the DOD's second-biggest contractor, after Lockheed Martin.

Earlier this year, Trump steamrolled the Kuwaiti government by making good on a $10 billion deal with Boeing that had been stalled for more than a year.

Over the years, Boeing has given us war-winning legends: the B-17 Flying Fortress, the B-29 Superfortress, and its Cold War successor, the B-52 Stratofortress.

Modern products like the AH-64 Apache attack helicopter and the F-15 and F-18 fighter and attack jets represent the very backbone of American air superiority.

Boeing is also a partner of Lockheed in the development and production of the F-15’s successor: the F-22 Raptor...

The Trump Effect

The Trump administration has boosted projected defense spending by more than $200 billion for fiscal years 2017 through 2019.

This includes a $15 billion addition to former President Barack Obama’s full-year 2017 budget and the $639 billion budget for 2018. This was a 23% enhancement over the last year that the defense budget was controlled by a Democrat.

Though it may seem wasteful and in poor taste by man, public funds spent with American firms for developing and manufacturing the most technologically advanced products stands as the most pragmatic, beneficial use of taxpayers' dollars.

But any way you look at it, one thing is clear: The hundreds of billions of dollars that this administration has committed to new defense spending will keep three major arms-makers on a path of growth for decades to come. And that'll be true no matter which way global politics takes us.

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