Have these 5 Best Defense (Stocks) Become the Best Offense (Stocks)?


Nothing clears the pallet of a diehard value investor better than a good old-fashioned bear market. In calendar year 2018 – and especially December 2018 – we were given what I would call a bear market. However, not all bear markets are the same. Sometimes bear markets occur because of a bad economic scenario such as a recession. But that was not the case in 2018. In fact, I could arguably state that 2018 was a great year for the market and a great year for many business enterprises. To my way of thinking, the 2018 bear market is the best kind of all.

Allow me to explain. Many great businesses had become overvalued as we entered calendar year 2018. Consequently, from a value investor’s perspective, many great businesses were not great investments because of excessive valuation. This was especially true with the aerospace and defense subsectors. Moreover, excessively high valuations that started manifesting in 2016 were the exact antithesis of excessively low valuations that we experienced coming out of the great recession of 2008. To summarize, we went from ridiculous undervaluation to unjustified overvaluation almost equally over the course of the last decade. In other words, five undervalued years brought us five overvalued years.

Furthermore, 2018 has potentially delivered the opportunity to invest in a good industry with many excellent companies at valuations that once again makes sense. Therefore, as a twist on the old adage “the best defense is a good offense” – I offer these five best Aerospace and Defense stocks as attractive offensive research candidates for double-digit future returns and above-average growing dividend streams. In other words, I believe these defense stocks are positioned to score a lot of performance points over the next 3 to 5 years.

Portfolio Review: 5 Best Defense (Stocks)

FAST Graphs analyze out loud video: Lessons on Value Investing Lockheed Martin (LMT), General Dynamics (GD), Raytheon (RTN), Northrop Grumman (NOC), L3 Technologies (LLL):