Trump’s Inauguration Looms Large for Small Cap Defense Stocks

Just two short days from now, Donald J. Trump will take the oath of office and become the 45th president of the United States.

Open questions remain about some of his post-inauguration plans, such as his approach to tax reform. He just disagreed with the Republican Congress’s proposed tax plan, for instance, showing that he isn’t even going to give his own party a free pass to do what they want for the American people.

But there’s one thing Trump, the Republican-controlled Congress and General James “Mad Dog” Mattis, his newly nominated Secretary of Defense, do wholeheartedly agree on: The Department of Defense should receive among the largest amounts of investment of all government departments.

It’s easy to see why. From Asia to Russia to the Middle East, geopolitical tensions are getting worse by the day.

Just yesterday, China defended globalization and supportive trade policies, drawing a stark contrast with Trump’s more protective stance. That just added to existing U.S.-Sino tensions, which flared up recently after the President-elect ignored the longstanding ‘One China’ policy and took a congratulatory call from the President of Taiwan.

Trump then said it was up for negotiation whether the U.S. would recognize Taiwan as a separate country. On Saturday, China’s foreign ministry called that point “non-negotiable.” Then in an editorial on Monday, The China Daily, a newspaper affiliated with the government’s press office, said Trump was “playing with fire.”

As for U.S.-Russian relations, they’ve been tainted by the ongoing election hacking scandal. We don’t know for sure what happened, given conflicting reports, charges, and denials on both sides of the Atlantic.

But we can be sure that our enemies are increasingly willing to launch cyber attacks, and that their tactics are increasingly sophisticated. And we can be sure that our investment in security necessary to keep our critical networks and systems safe has lagged. It’s absolutely scary to think something as pivotal to a country as an election could be tainted by exposure to enemies of the state.

And let’s not forget the increase in terror activity. We just learned that the gunman who shot his way into a Turkish nightclub on New Year’s Day, killing 39 people, confessed to being allied with ISIS when he was captured Monday. He said the attack was retaliation for Turkish involvement in Syria.

Also, just this weekend closer to home, the wife of the Orlando nightclub shooter was arrested. Omar Mateen killed 49 people in that homegrown terrorism attack, pledging support to ISIS in the process.

Bottom line: We face more traditional state-sponsored threats, as well as terrorist attacks from groups like ISIS and their loosely aligned followers. And we’re confronting increasingly aggressive online threats. That means the reasons for a continuing build up in our defense and cybersecurity capabilities could not be stronger. No wonder the incoming administration is planning on writing huge checks to the companies who will help bolster our defenses.

With that in mind, here are some of the highest-rated, small cap stocks in the aerospace/defense and cyberwarfare industries:

My screen included companies with market capitalizations of at least $100 million, but no more than $2 billion. These are a few companies you might want to investigate further.

If you want much more in-depth information on this sector … as well as specific recommendations on how to profit from the coming defense spending boom … I urge you to check out my colleague Mike Larson’s work.

He just published a report called “American Arms Bonanza”. It explains how hundreds of billions … even TRILLIONS … of dollars will flow out of Washington into a handful of companies whose stocks could double, triple, or more. Mike believes savvy investors in the right stocks stand to make a fortune from Trump’s Peace-Through-Strength approach over the next four to eight years.

Just click here for more details, and to get your hands on this brand new report.

Best,

Mandeep

Small Cap Edition, By Mandeep Rai, Senior Analyst Mandeep Rai has more than 15 years of investing experience, working as both a stock and credit analyst. At Weiss Ratings, he researches and evaluates financial and economic themes, and makes decisions on when to buy or sell specific shares for the Top Stocks Under $10 portfolio.