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All three cutting-edge defense stocks to buy should not be lumped in other legacy military contractors that may not have the same prospects for outsized gains. Wary investors should consider a recent Citi Research that opined fear about drastic defense cuts seems overblown.
"Global defense spending as a percentage of gross domestic product (GDP) is likely to remain in line with current levels, given the geopolitical environment," Citi Research wrote. "Spending has been on the rise since 2015 as great power competition returned following the invasion of Crimea. In that same year, the United States stood up the Defense Innovation Unit as it looked to leverage nontraditional sources of technological advantage.
"And more recently, the conflicts in Ukraine and the Middle East have sharpened military and policymaker focus on defense spending. The combination of these factors has bolstered the outlook for legacy defense contractors and allowed a cadre of venture-backed companies to begin changing the face of the industrial base ecosystem. Simultaneously, deficits and debt have continued to expand across most Western economies, leading some to question the sustainability and prioritization of government spending."
Three Cutting-Edge Defense Stocks to Buy: Watch out for Budget Battles
Citi Research's report addressed the outlook for defense spending broadly to provide insight on the spending priorities of America's Western allies, and to assess the potential winners and losers of the evolving landscape.
The first order of business heading into 2025 is the passage of the FY25 budget, with Congress continuing to fund the government with Continuing Resolutions for now, Citi Research wrote. A full-year bill likely to be passed in the March timeframe could become a welcome outcome for contractors, the investment firm added.
"Next on the calendar would be the introduction of the U.S. government's FY26 budget, which will likely hit in mid-to-late spring," Citi Research continued. "This will be the President-elect's first opportunity to demonstrate his policy intentions -- both domestic and foreign policy. It's then that we expect to take the prospects of extreme isolationism off the table. There will sure to be some fireworks at the program level as the administration looks for negotiating advantage with suppliers, but we expect the topline numbers to be supportive of industry growth."
Three Cutting-Edge Defense Stocks to Buy: Can DOGE Reductions Be Dodged?
Then comes the CY26 National Security and Defense Strategy documents, along with the Department of Government Efficiency (DOGE) report. Ideally, strategies drive budgets, Citi Research wrote. Too often it's the other way around, the investment firm indicated.
The DOGE report will be released around the same time as the National Security Strategy (NSS) and the National Defense Strategy (NDS) updates. The NSS outlines how the United States will advance its vital interests and pursue a free, open, prosperous and secure world while outcompeting strategic competitors. The NDS directs the U.S. Department of Defense to act urgently to sustain and strengthen America's military and deterrence capability by defending the homeland, fending off threats, reinforcing diplomacy and strengthening relationships with allies.
"Our expectation is that Russia and China will remain the primary threats, deterrence will be the strategy to address those threats, and that military modernization will be the tactic to garner that deterrence," Citi Research wrote. "The DOGE effort will likely result in recommendations on how to streamline procurement processes and perhaps jettison some unneeded capabilities, i.e., the A-10 aircraft, but we don't believe it will result in a wholesale change in the U.S.' role in the world or the geopolitical environment. | | Investing legend Dr. Mark Skousen recently gave a talk to a small group in the heart of Washington, D.C. In it, he revealed the cornerstone of his retirement plan -- and the one investment that helped make him a millionaire. Click here to watch Dr. Skousen's presentation -- and learn about "the best way to become a millionaire in America." Click Here... | | | Three Cutting-Edge Defense Stocks to Buy: QuickLogic Corporation
San Jose, California-based QuickLogic Corporation (NASDAQ: QUIK) offers a way for investors to seek growth through a fabless semiconductor company that specializes in creating innovative embedded Field Programmable Gate Array (FPGA) (eFPGA) IP, discrete FPGA, and FPGA System-on-Chip (SoCs) that power everything from industrial and aerospace systems to consumer electronics and cutting-edge AI applications at the edge and endpoint.
QuickLogic is a current recommendation of the Gilder's Moonshots advisory service. The advisory service is aimed at featuring cutting-edge technology stocks that will be part of important growth trends.
George Gilder, who heads Gilder's Technology Report, talks to Paul Dykewicz.
QuickLogic secured a $6.575 million contract on Dec. 23 from the Department of Defense to advance its Strategic Radiation Hardened FPGA program. This award is the fourth tranche of a multi-year initiative, bringing total funding to more than $33 million. The program addresses critical aerospace and defense needs, and the news spurred an 8.4% pre-market stock gain.
The contract matters because it reinforces QuickLogic's reputation as a "trusted provider" of mission-critical technology for national security applications, according to the Gilder's Moonshots advisory service. The funding also highlights the company's leadership in developing breakthrough solutions for strategic and space systems, Gilder's Moonshots continued.
Chart courtesy of www.stockcharts.com
Three Cutting-Edge Defense Stocks to Buy: SkyWater Technology
SkyWater Technology (NASDAQ: SKYT) is a Bloomington, Minnesota-based pure-play silicon foundry. The company is the only U.S.-owned pure-play silicon foundry that manufactures semiconductors and serves as a key supplier to the U.S. Department of Defense.
The Gilder's Moonshots also is recommending SkyWater Technology among its top choices. The company recently secured a preliminary $16 million federal funding agreement under the CHIPS Act, paired with $19 million from the State of Minnesota.
Chart courtesy of www.stockcharts.com
That funding supports a 30% expansion of semiconductor production capacity and modernization of its Bloomington facility, the Gilder's Moonshots advisory service reported. The financial support reinforces SkyWater's role as a "cornerstone" of America's domestic chip manufacturing strategy, according to Gilder's Moonshots.
"The investments help ensure a secure supply chain for strategic defense and commercial programs, positioning the company as a national asset in semiconductor innovation," wrote George Gilder, a technology futurist who tracks the semiconductor industry closely as the head of Gilder's Moonshots and Gilder's Technology Report.
The achievements of these two portfolio companies of Gilder's Moonshots spotlight the power of strategic innovation from groundbreaking partnerships to technological advancements, Gilder continued.
"As we step into 2025, we're inspired by the transformative impact of ingenuity and determination -- especially in the face of headwinds the market has endured," Gilder's Moonshots concluded. | | With Musk already increasing his influence in government, the markets are feeling the tremors — and the opportunities are massive.
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Rocket Lab (NasdaqCM: RKLB), a Long Beach, California-based rocket launcher, is a current recommendation of Citi Research and a recent profitable pick of Jim Woods in his Bullseye Stock Trader advisory service. The stock rose 10.87% in 11 days after Woods recommended it to his Bullseye Stock Trader subscribers. He also recommended call options in Rocket Lab that have jumped 19.09% during the same short time.
Jim Woods heads the Successful Investing newsletter and co-leads Fast Money Alert.
Citi Research put a $28 price target on Rocket Lab. The confidence has been backed up by the company's achieving 3Q results and a 4Q outlook modestly better than consensus expectations, the investment firm's analysts wrote.
Most importantly, the company announced it had booked its launch customer for the Neutron rocket, which is set for its first flight in 2025. Citi Research wrote that the commitment is a key milestone as it demonstrates customer acceptance and helps solidify the business case for the product.
"In our view, there is likely upside potential to the available supply of the rocket than management is letting on given solid execution on both the Electron and Neutron programs to date, Citi Research wrote.
Chart courtesy of www.stockcharts.com
Three Cutting-Edge Defense Stocks to Buy: Summary
The three cutting-edge defense stocks to buy amid geopolitical crises should have staying power to grow strongly due to their respective technical innovations. Investors who may want to buy shares in those stocks can take comfort from the strong recommendations of market followers who have strong records of choosing companies with promising prospects. | | Sincerely,
Paul Dykewicz, Editor StockInvestor.com
| | About Paul Dykewicz: Paul Dykewicz is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul also is the author of an inspirational book, "Holy Smokes! Golden Guidance from Notre Dame's Championship Chaplain", with a foreword by former national championship-winning football coach Lou Holtz. Follow Paul on Twitter @PaulDykewicz. | | | | | |
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