Forget the Trump Media & Technology Group (NASDAQ: DJT) — if you want to profit from “Trump stocks,” look to the defense sector.
This isn’t new advice — it’s profitable advice.
You see, when Donald Trump first got elected back in 2016, I wrote an entire article telling investors how to profit.
That included energy companies and big banks, which will indeed profit from a second Trump presidency should he win. But no companies stand to benefit more than defense contractors.
Set the pandemic crash aside for the moment and look at the period from November 2016 to February 2020. The iShares U.S. Aerospace & Defense ETF (ITA) posted an 82% return in that time.
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Northrop Grumman (NYSE: NOC) surged 64% in Trump’s first term.
RTX (NYSE: RTX) climbed 52%.
And Lockheed Martin (NYSE: LMT) more than doubled in value, surging 109%.
Furthermore, the COVID crash notwithstanding, all of these stocks are currently trading above their pre-pandemic highs.
Lockheed Martin is up 9%. Northrop Grumman is up 18%. RTX is up 6.25%. And General Dynamics, which only delivered a 23% return in Trump’s first term, is now up 57% from its pre-pandemic peak.
The fact that President Biden has pushed the U.S. defense budget up to record highs is obviously key to that continued growth.
So, too, is Russia’s invasion of Ukraine. That created a vacuum of American ammunition and weapons platforms that must now be back-filled and spurred a new era of defense spending in Europe.
But don’t forget who really got the ball rolling eight years ago…
The U.S. defense budget rose an astonishing 37% under Donald Trump, climbing from $534.3 billion in 2016 to $733 billion in 2020. Defense spending as a percentage of GDP also increased under Trump, going from 3.1% to 3.4% in that time.
Another key thing to remember is how hard Trump pushed our European allies to stand on their own two feet. Trump’s incessant brow-beating of NATO spurred the alliance to ramp up its spending just as Russia’s belligerence did.
He effectively added fuel to the fire, helping to push NATO Europe’s defense spending from $244 billion in 2016 to $291 billion in 2020 — a 19% increase.
Again that was before Russia’s invasion. And in the years since, the NATO budget has expanded by another $90 billion to an estimated $380 billion this year.
Also once more, it’s not just raw spending that’s up. Defense spending as a percentage of GDP is up significantly as well — going from less than 1.46% in 2016 to 2% today.
Indeed, a record 23 of 32 NATO members are set to clear the alliance’s 2% guidance this year. And those on the Eastern front closest to Russia aim to spend even more than that — going up to or even exceeding 3% of GDP.
Now, let’s say Trump does get reelected. What happens then?
Well, Trump has made it quite clear that America’s allies still aren’t spending enough to satisfy him. In February, he falsely accused NATO allies of being “delinquent” and said he would encourage Russia to do “whatever the hell they want” to those countries.
And last week, Trump took aim at Taiwan, as well.
“Taiwan should pay us for defense,” Trump said. “You know, we’re no different than an insurance company.”
This is how Donald Trump views defense. It’s not about democracy, global security, or American military doctrine — it’s more like a mob boss running a protection racket.
Donald Trump is effectively an isolationist who sees no value in alliances outside of fiscal and political leverage.
What that means, though, is that countries around the world will have to spend a lot more money on defense in the next four years — regardless of who wins the election but especially if Trump does.
That will be extremely rewarding for American defense contractors, who are making a killing from our foreign allies right now.
That is, sales of American weapons, ammunition, and equipment to foreign countries climbed 55% last year to a record-high $81 billion. That figure would almost certainly rise further under Trump.
Meanwhile, I can’t imagine Trump would let himself be outdone by Joe Biden’s defense budgets either. A trillion-dollar defense budget would be a given under a new Trump term.
That’s why defense contractors are the only Trump stocks an investor needs going forward — especially since they’d still do well if Trump loses.
Better still, investors can draw a huge amount of income from defense stocks. You can find out more about that in our latest report regarding Pentagon Payouts.
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. Be sure to visit our Angel Investment Research channel on YouTube and tune into Jason’s podcasts. Want to hear more from Jason? Sign up to receive emails directly from him ranging from market commentaries to opportunities that he has his eye on. 
