The Paris terrorist attack sparked renewed demand for aerospace and defense stocks. The entire industry ripped higher right out of the gate on Monday and hasn’t looked back since.
While the fear trade is in full force, veteran spectators of defense stocks shouldn’t be surprised. Though the horrific events shocked the world and accelerated demand for companies in the aerospace and defense industry, many were already heading higher.
A brief survey of the who’s who of the industry reveals uptrending stocks across the board, particularly in the back half of 2015.
With terror and war back in the headlines, defense stocks may well remain under accumulation for a spell. Here are three of the best looking defense stocks to buy.
Defense Stocks to Buy: Lockheed Martin (LMT)
Lockheed Martin Corporation (LMT) is a leading company in the defense industry, and its price chart is behaving in kind. From a technical perspective, the bulls appear firmly in control. Since the August crash, LMT stock has developed an uninterrupted series of higher pivot highs and higher pivot lows.
This week’s pop arrived just as LMT was testing the rising 50-day moving average — a logical spot for a rebound to commence. With LMT stock now testing resistance, you might consider waiting for some consolidation or a pullback before pulling the trigger.
Either way, consider buying the Jan $220 call to capitalize on further upside in LMT stock through year-end.
Defense Stocks to Buy: Raytheon Company (RTN)
While the Paris episode sparked a rousing rebound in LMT, it delivered an even bigger breakout to Raytheon Company (RTN). Not that RTN stock was in need of a bullish catalyst — it has been firing on all cylinders for years and already sat a pebble toss away from a new all-time high heading into this week.
If you’ve ever wondered what a clean breakout setup looks like, consider RTN your poster child. Its recent consolidation developed on below-average volume, and this week’s breakout transpired with a sharp uptick in volume.
While RTN stock may be due for a bit of a pullback, it’s a buy on any and all dips. Consider buying the Jan $120 call to score on further upside.
Defense Stocks to Buy: L-3 Communications (LLL)
L-3 Communications Holdings (LLL) rounds out our trio of defense stocks. This week’s buying frenzy generated a higher pivot low to keep its uptrend intact. Skeptics of technical analysis should note LLL stock found support right at its 20-day moving average.
Coincidence? I think not.
Like its predecessors, the volume patterns in LMT stock have been equally compelling. The past three upswings have been accompanied by high volume suggesting buyers want in and they aren’t afraid to pay up for their shares.
Consider buying the Jan $125 call on any type of pause or pullback in the coming days.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.