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MPower: Why The Best Offense A Good Defense

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Theodore Roosevelt once said, “Speak softly and carry a big stick.” It’s an important lesson that you shouldn’t go looking for trouble, but if trouble finds you, you should defend yourself. The same is true when it comes to investing.

Unfortunately, one of the realities of mankind is our tendency to engage in war. With hostilities ratcheting up across the globe, this tendency seems to be rearing its ugly head yet again.

For the past several months, the war in Ukraine has raged on with few signs of conclusion. As the conflict devastates the Ukrainian and Russian economies, it continues to keep energy prices elevated around the world. Add to the mix the growing threat of China, and things begin to look pretty ominous for the future.

Recently, in response to Nancy Pelosi’s visit to Taiwan, China’s People’s Liberation Army has stepped up military exercises just off the coast of the island.

With all this confrontation taking place, no one wants to get caught carrying a small stick. This has resulted in countries around the world increasing their defense budgets in order to better defend themselves.

Increased military spending means companies like Lockheed Martin (LMT), Raytheon (RTX), Northrop Grumman (NOC), as well as many others, are seeing increased government contracts.

This investment theme is taking directly from the evolving geopolitical situation we find ourselves in. Like all good investors, we must be able to spot trends before or as they develop to constantly find value in the market.

Let’s take a closer look at the three stocks mentioned above to see how they’ve performed over the past year, and determine if this performance will continue:

While the market has taken investors for a ride, these three stocks have remained steady and continue to outperform. Their strength relative to a weak market, as well as the increasing demand for their products, have made these very popular stocks among investors and institutions.

Despite the rally we’ve seen over the past few weeks, the mood still feels a bit bearish. However, given the many catalysts and their strong performance throughout the year, these stocks could have more room to run.

These companies provide defenses to militaries around the world, but now they’ll defend your portfolio as well.

Today’s feature: Military and Defense

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