“Defense stocks usually perform well even in times of peace, because defense spending rarely drops. This year, operations in Syria and Iraq against ISIS are winding down, but North Korea’s fast-moving missile program poses new security threats for the U.S. and its allies. U.S. forces remain in battle against the Taliban in Afghanistan,” according to IBD.
President Trump has previously ignited the fire under the aerospace and defense sector after stating that the U.S. was ready to respond with “fire and fury” in the wake of reports that Pyongyang successfully miniaturized a nuclear weapon to fit in one of its missiles.
“Lockheed builds the Terminal High Altitude Area Defense (THAAD) system, which can shoot down short- and medium-range ballistic missiles. Raytheon builds the Patriot missile defense system. President Trump is seeking an additional $4 billion for missile defense programs amid rising tensions with North Korea,” according to IBD.
Traders looking for a more aggressive play on aerospace equities can consider the Direxion Daily Aerospace & Defense Bull 3X Shares (NYSEARCA: DFEN). DFEN, which debuted earlier this year, seeks to deliver triple the daily returns of the Dow Jones U.S. Select Aerospace & Defense Index.
For more information on the defense industry, visit our aerospace & defense category.