Buy Into the Biggest Military Build-Out Since WWII

America’s closest allies have come to a sobering realization — and it’s not a pretty one. 

Hear it from Nathalie Tocci — a graduate of Oxford and the London School of Economics who’s worked in the upper echelons of European foreign policy affairs for the past 20 years and currently serves on the board of two Italian corporations (Eni SpA and Edison)…

“The worst case is one in which the U.S. cannot be persuaded to be nice to us or even to ignore us. It is one in which the U.S. is out there to undermine us.”

This is where Europe is a month after President Trump reassumed the reins of a country that was once considered the guiding light of Western democracy.

The world’s sole remaining superpower. The wealthiest, most powerful country in the history of the world. Liberator of Europe. Destroyer of Nazis. Bane of the U.S.S.R. Defenders of freedom. France once sent us a statue. 

No more. 

Since returning to the Oval Office, Trump has… 

• Threatened to invade Greenland and annex Canada, making it the 51st state. 

• Renamed the Gulf of Mexico the Gulf of America

• Opened up a multi-front trade war and forfeited America’s position as the most business-friendly country on the planet.

• Abandoned the World Health Organization and potentially the United Nations and NATO.

• Said he’d depopulate the Gaza Strip and make it the “Riviera of the Middle East.”

• And actively supported Russia’s attempt to conquer Ukraine.

To be clear, it’s that last point that really got the attention of Tocci and all of Europe.

To see an American president switch sides and join hands with a war criminal that’s actively invading Eastern Europe and threatens the United States with nuclear annihilation every six months was jarring…

Even after Trump campaigned on the promise of letting the former KGB agent do whatever the hell he wants. (Promise kept!)

Now, with America no longer in its corner, Europe is racing to defend itself.

European Commission President Ursula von der Leyen has laid out a plan to “urgently” increase defense spending with a cash infusion of 800 billion euros ($841 billion).

“Europe is ready to massively boost its defense spending, both to respond to the short-term urgency to act and to support Ukraine but also to address the long-term need to take on much more responsibility for our own European security,” she said in a statement.

She also called it an “era of rearmament.”

The money will come from loans and looser budget requirements. It would also redirect funds initially destined for the EU’s poorer countries toward military spending and give the European Investment Bank more room to fund defense projects.

These additional funds will pile on top of  a military expansion that’s accelerated ever since Russia first pilfered Crimea from Ukraine in 2014. 

Indeed, President Trump often pillories European powers for not spending on defense, but 25 of 32 NATO members now meet or exceed the alliance’s 2% defense spending guidance — up from just three a decade ago. And some, like Poland and other former victims of Soviet aggression, are petitioning for even higher spending, in the neighborhood of 3%–5% of GDP.

Other drastic policy shifts are being considered, as well. 

Germany is reforming its constitution to exempt defense spending from its debt ceiling. And France is mulling a tax increase on its wealthiest citizens to accelerate its military build-up. French President Emmanuel Macron has also offered to broaden his country’s nuclear deterrent to encompass the entire continent.

France low-key has the world’s fourth-largest nuclear arsenal, with roughly 290 nuclear warheads.

So what does all this mean in terms of investment opportunities?

Well, to start, American defense contractors like Lockheed Martin (NYSE: LMT), RTX (NYSE: RTX), General Dynamics (NYSE: GD), and Northrop Grumman (NYSE: NOC) should benefit. 

America makes the best, most sophisticated, and most effective weapons in the world. European companies simply cannot compete. 

However, the continent does have some in-house names that will catch a huge tailwind from this. 

After all, the key lesson Europe seems to be learning on the fly is that America cannot be trusted as an ally. So there’s going to be more reticence about bringing more U.S. weapons platforms into Europe — especially amid a trade war.

With that being the case, you’re looking at companies like Leonardo SpA, which trades on the Italian exchange but has OTC shares (FINMY). It’s also the parent to Leonardo DRS (NASDAQ: DRS), which it spun off a few years ago.  

Not to give too much away, but I steered my Secret Stock Files subscribers into that stock when it listed and we’re up more than 200% on it today. (And if you want to get all the latest on defense tech investments big and small, you should definitely sign up and catch my latest recommendation here.)

BAE Systems (OTC: BAESY) and Rheinmetall (OTC: RNMBY) are two other European juggernauts. 

Not for nothing, Israel is actually one of the world’s biggest defense incubators, with Elbit Systems (NASDAQ: ESLT) being the top publicly traded name. 

So there are a lot of plays to make here. 

Again, though, if you want to get in on some smaller, up-and-coming defense tech plays with the potential for three- and four-digit returns, you’re going to want to check out Secret Stock Files.

And we’ll see how this whole situation plays out together.

Fight on,

Jason Simpkins

Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more…

In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor's page.

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