These Small Stocks Are Slaying the S&P 500

All in all, it’s been a decent year for the market, as the S&P 500 is up about 15% YTD.

But you know what’s doing even better?

Defense tech companies. 

I’m not talking about the big guns like RTX Corp. (NYSE: RTX) and Northrop Grumman (NYSE: NOC) — though they’re faring pretty well too, up 55% and 28%, respectively. 

I’m talking about a new generation of tech-centered defense contractors that are making a fortune modernizing America’s military. 

The NYSE Arca Defense Index is up 43% this year, and seven of its top 10 gainers are mid- and small-cap companies.

And almost all of them are in my Secret Stock Files portfolio.

I can’t tell you what those stocks are, but I can show you the gains:

Not all of these stocks have paid off (yet), but as you can see, we’re sitting on gains of 112%, 121%, 126%, 137%, 188%, 305%, 332%, and almost 500%.

And that’s after we cashed out a 1,500% pay off on Palantir Technologies (NASDAQ: PLTR), which I first recommended three years ago.

Even stocks I’ve recommended in just the past few months are already up double digits. 

And what these companies all have in common is that they provide high-end technology like smart computers and AI programs and low-cost munitions and platforms like drones. 

That or they make the materials and components needed to manufacture those things.

This is a direct result of two things…

First, the evolution of modern warfare that’s more oriented toward drones, AI, and space-based warfare. 

And secondly, massive defense budgets. 

The United States is already set to spend $1 trillion on defense in the next year, and Europe is doing the same. 

Indeed, ongoing wars in Ukraine and Gaza — along with the growing aggression of rivals like Russia, China, Iran, and North Korea — have catapulted us into a new golden age of defense spending. 

And it’s turning small defense companies into big ones.

You’re also seeing the trend affect the M&A market where small-sized transactions have become routine.

Just one of the 56 acquisitions of U.S. targets this year has exceeded $12 billion in value.

This is because the traditional defense majors are scooping up smaller companies to adapt to demand.

It’s also because more tech startups are popping up on the scene to steal market share away from them.

Indeed, startup funding in aerospace and defense has hit its highest point in at least a decade — $14.17 billion as of August.

Make no mistake, defense tech is the hottest game in town. And that’s not going to change anytime soon. 

The world isn’t getting any safer — only more dangerous. 

And defense budgets aren’t going down — they’re going to keep rising.

So if you want to get in on this new defense renaissance, check out my latest Secret Stock Files report here.

Do it now, though, because in the next few days, I’m going to blow the lid off something really big. 

I can’t say what, but you’ll know it when you see it. 

And when that happens, my current subscribers will be ahead of everyone else rushing to get in on this shocking new development.

So stay tuned. You’ll be hearing more from me shortly.

Fight on,

Jason Simpkins

Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more… He also serves as editor of The Crow’s Nest where he analyzes investments beyond the scope of the defense sector.

For more on Jason, check out his editor's page.

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