Northrop Grumman Corporation (NYSE:NOC) is one of the top-tier defense stocks in the world. And now is a very good time for the defense sector.
Beyond the fact that the prolonged conflict in Iraq and Afghanistan has emptied the military’s surplus of equipment, weapons and infrastructure, we have a president who has vowed to Make America Great Again, and that includes the military.
And there are plenty of threats that make a defense ‘supercycle’ a distinct possibility.
North Korea has a functional nuclear warhead and has a rocket that can get it to the US.
The National Association of State Chief Information Officers has warned that a cyberattack on top of a natural disaster — say, a blizzard and the electrical grid in the Midwest shutting down — can’t be stopped with current cybersecurity measures in place on the military or civilian sides.
Europe is reeling from the massive refugee crisis from Syria and North Africa as well as homegrown Islamic State terrorism.
And that doesn’t include, the war in Yemen or unrest throughout Africa and South America.
Simply put, the world is a more dangerous place than it was five years ago.
According to the Department of Defense (DoD), the current defense budget is 14.3% of total budget spending ($585 billion) and 3.1% of GDP. Both are near historic lows.
Bottom line: This is a great time to move into NOC stock.
NOC Stock Soaring
Northrop Grumman is a leader in both aircraft and cybersecurity measures for the military and intelligence services.
NOC recently received the largest military contract in history for the next-generation long range bomber, the B-21 Raider. Each plane is expected to cost $550 million and the DoD wants 80-100 of them, a $55 billion deal. And some defense analysts say the deal is closer to $80 billion. That alone is a compelling reason to get on board this stock.
But the stock is up 32% already year to date. There needs to be more in this stock than just this massive long-term project. And there is.
This defense contractor is one of the top producers of unmanned aerial vehicles (aka, drones) and other C5ISR (command, control, communications, cyber, computers and intelligence, surveillance and reconnaissance) tools for land, air and sea.
For NOC the most important ‘C’ is cyber. As a leader in this white-hot sector, there is huge growth potential for both the military and homeland security.
And now that President Donald Trump is at the helm, NOC should be a major partner in building the C5ISR needed for his huge border wall.
The trend has begun. NOC reported earnings in late October and beat earnings by close to 17%. And earnings have grown 21% from last quarter. Revenue is already growing at a solid clip. It’s no surprise NOC also guided higher for the rest of the year. Growth for NOC is just beginning.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
