Two of the Best Defense Stocks to Buy Right Now

With Brexit, an inverted yield curve, and the U.S. yet to strike a trade deal with China, investors are uncertain about the direction of the global economy. But the best defense stocks to buy can help some investors make the most of these circumstances.

The defense industry is always in demand no matter what, and it’s even more valuable in times like these. That’s why we’re bringing you two of the best defense stocks to buy right now.

The U.S. government is prepared to ramp up defense spending in the 2020 budget. U.S. President Donald Trump’s recent proposal called for a defense budget of $750 billion.

That would be a $34 billion increase from the previous year.

That’s why there are few better places to invest than in the companies that sell to the Pentagon.

We found the best defense stocks to buy with the Money Morning Stock VQScore™, a proprietary system that tells us which stocks are poised to break out in the next 12 months.

The first on our list not only pays a solid dividend – good for investing in volatile times – but also has a perfect 4.75 VQScore.

And it could be on the verge of a breakout…

Defense Stock to Buy, No. 2: Lockheed Martin Corp.

The VQScore system gives Lockheed Martin Corp. (NYSE: LMT) a perfect score of 4.75. This defense stock is a staple of the U.S. defense industry, and it’s the company behind the F-35 program. Tens of billions of dollars are pouring into fighter jets right now, especially the Lockheed F-35 and Boeing’s F-15EX.

And right now, Lockheed is winning the competition.

While the Pentagon plans to buy eight F-15 Boeing jets, it plans to buy another 78 F-35s next year for $11.2 billion.

The stock could get a boost once Congress authorizes the request, and politicians are always reluctant to vote against security.

Plus, Lockheed Martin has a solid balance sheet, so there is no need to worry about corporate debt or a sharp exodus of investor capital. The firm also pays a dividend yield of 2.94%, which is a sign the company likes to reward shareholders.

But the best part of the stock is its upside. Wall Street’s average price target is $340, which represents about 16% upside from today’s $294.22. However, expectations should be more in line with those of Buckingham Research, which projects a target of $305 per share, a potential 38% gain in 12 months.

With a perfect VQScore, a booming U.S. defense budget, and plenty of projects in the pipeline, Lockheed is one of the best defense stocks to own right now.

But our top defense stock to buy now is even better positioned.

Not only does it have a perfect VQScore, but it’s getting a huge catalyst this year.

This company builds 70% of the U.S. navy’s ships, and the navy is going on a massive $28.9 billion binge this year…

Defense Stock to Buy, No. 1: Huntington Ingalls Industries Inc.

Huntington Ingalls Industries Inc. (NYSE: HII) is America’s top shipbuilder. President Trump has already said that he wants to increase the number of U.S. warships from 287 to 350 over the next few decades. That makes Huntington a prime investment target.

The U.S. Navy currently plans to purchase two aircraft carriers from Huntington. But Huntington stands to benefit from another area of naval spending.

Huntington aims to bolster production of Virginia-class submarines. The Virginia class consists of nuclear-powered, fast attack submersibles that will be necessary for the next generation of warfare.

The firm also produces the Columbia-class, which is nuclear-powered and nuclear-armed with ballistic missiles. The Navy says this program cannot be negotiated and is critical to the nation’s future in air, land, and sea defense. To develop just 12 of these submarines, some analysts project the cost will be at least $128 billion.

With that much cash possibly coming down the pipeline, HII shares are dirt cheap. The company trades at 19.2 price/earnings in an industry where the average is more than double that figure, according to Reuters.

The consensus Wall Street target for HII stock is $248, or 22% higher from Thursday’s closing price. However, a perfect VQScore of 4.75 signals that the stock has even higher upside, plus the president’s emphasis on shipbuilding will be a huge catalyst going forward.

We expect the stock could soar closer to 50% higher, and that’s not including the money you’d make from its healthy 1.7% dividend yield.

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Source: Money Morning