Keep an eye on “Golden Dome” stocks.
The US Defense Department is expected to brief President Trump on options for an “Iron Dome for America,” often referred to as the “Golden Dome.”
All of which is modeled on Israel’s Iron Dome defense system.
As noted by NBC News, “Trump’s executive order required the Pentagon to come up with an initial blueprint for Iron Dome for America by mid-April, and those plans are what will be briefed to him in the coming days. His order also requires that at least some elements of the initiative be operational by the end of next year.”
“The most modest plan could be assembled rather quickly and cost about $10 billion, the middle option would cost less than $100 billion, and the largest option would cost several hundred billion dollars,” they added.
So, where should you invest to take advantage of the potential Golden Dome?
Here are a few ideas.
SPDR S&P Aerospace & Defense ETF (SYM: XAR)
One way to take advantage of the idea is to diversify with the 36 defense holdings of the SPDR S&P Aerospace & Defense ETF (XAR).
The SPDR S&P Aerospace & Defense ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Aerospace & Defense Select Industry Index. The XAR ETF has an expense ratio of 0.35% and a yield of 0.39%.
Or, you can always jump into individual stocks, such as:
RTX Corp. (SYM: RTX)
With a yield of 1.95%, RTX Corporation, an aerospace and defense company, provides systems and services for the commercial, military, and government customers in the United States and internationally. Better, the company already said its fully-prepared to support the Dome.
“This is what Raytheon is exceptionally good at doing” Neil Mitchill, chief financial officer at RTX, said as quoted by Stripes.com. “So, we are fully prepared to support the president’s ambitions there.” “It would be a tremendous system and as you know, we play a role in the Iron Dome in Israel as well,” he added.
HEICO Corp. (SYM: HEI)
HEICO Corporation is engaged primarily in the design, production, servicing and distribution of products and services to certain niche segments of the aviation, defense, space, medical, telecommunications and electronics industries.
HEICO’s customers include a majority of the world’s airlines and overhaul shops, as well as numerous defense and space contractors and military agencies worldwide.
Not only is HEICO a strong beneficiary of a potential $1 trillion space economy, aviation and defense spending, but it’s also a substantial beneficiary of the new “Iron Dome.” Even better, Warren Buffett’s Berkshire Hathaway just bought 1.044 million shares of HEI, as well.
Plus, according to analysts at KeyBanc Capital Markets:
“Heico has significant competitive advantages driven by its long-standing relationships with key aerospace and defense customers,” Michael Leshock, analyst at KeyBanc, said in a January 15 report. “A large portion of Heico’s revenue is via LTAs (typically three to five years in duration), which creates strong visibility and consistent revenue streams.”
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