Northrop Grumman Corporation: New Cold War Could Send NOC Stock Soaring

NOC StockIf Clinton Wins, NOC Stock Could Skyrocket

Northrop Grumman Corporation (NYSE:NOC) has endured a chaotic month—in the markets, that is. Judging by its stock chart, if a human heart followed Northrop stock’s movements, its owner would need some serious health coverage. Yet, as volatile as NOC stock has performed, it continues to trade at around the most bullish of levels.

Northrop stock rose just as the White House and U.S. Congress were trying to contain military spending. The next president, whether he/she answers to the Hillary or the Donald, will be elected with a mandate to invest in defense. Only hermits and Japanese soldiers lost in the jungles of the Philippines, still fighting World War II, have not noticed that the United States and Russia are engaged in a new Cold War, or that NOC stock has huge potential.

Yet, Northrop stock is actually priced at about $212.0, which isn’t far from its highest-ever close of $221.96 per share. Indeed, there are no fundamentals that could explain the stock’s odd performance over the past month. Its latest second-quarter report, published in late July, was nothing if not bullish. Northrop Grumman ended the quarter with net earnings of $517.0 million or $2.85 per share, compared to $531.0 million but $2.74 per share a year earlier. Revenues were higher too, totaling $6.0 billion against $5.9 billion a year earlier.

Northrop had bullish guidance and the geopolitical environment supports this

Northrop was even in a position to improve earlier guidance, indicating that it would finish the fiscal year with earnings per share (EPS) of $11.00 instead of $10.75 while on higher revenues ($24.0 billion instead of $23.0 billion). In business school, they teach that when you have this kind of result, the stock should go higher. So what happened that could account for NOC stock’s counter-intuitive performance?

Northrop should have been trading at new highs in the $225.00–$230.00 range at least. The official consensus is $232.00. It’s true that shares had a tremendous rally since exactly a year ago. From September 1, 2015 to the present, shareholders saw their related holdings climb from $159.00 to the present $212.00. But the best is yet to come.

The U.S.-dominated North Atlantic Treaty Organization (NATO) will deploy missiles and other armaments in Eastern Europe. Northrop, lest some investors have forgotten, won the $80.0-billion contract to build a new generation of nuclear strategic bombers to replace the “B-2.” If the world resembled anything like the peace-loving, Kumbaya, everybody’s happy crowd, why would anybody need nuclear bombers, let alone nuclear weapons needing deployment?

But the new Cold War is not just with Russia; it’s with China too. The U.S. is even considering building military bases in Argentina and Brazil, presumably to check China’s growing influence in what used to be a U.S. backyard. (Source: “The New Cold War Between the US and China,| Counterpunch, August 30, 2016.) How does this translate into your savings, and the fact that they will be safely spent in defense stocks? NOC stock clearly has plenty to be bullish about.

Trump would boost military support; Clinton would boost military spending!

Oh, and don’t think that defense spending would be higher with Donald Trump at the controls. In fact, Trump has proven his credentials as a hawk. Trump and Vladimir Putin have praised each other. Hillary Clinton and Putin have exchanged words no less bitter than venom. Trump would ease support for Ukraine in order to improve ties with Moscow. Clinton was one of the master architects behind the Ukrainian split and consequent civil war. Meanwhile, as I write, China is making moves into Syria, signing a military cooperation agreement with that country’s embattled government.

Northrop Grumman, meanwhile, keeps winning contracts here and there. These may not approach the scale and size of the strategic bomber. Still, this week, shareholders may not even have noticed that the company won a $73.0-million contract for air and missile defense planning for the U.S. Army. (Source: “Northrop Grumman wins $73M tactical support contract,” Washington Technology, August 30, 2016.)

But Northrop makes all kinds of armaments. One of these includes a Robocop-like (literally) robot that can kill on command. Last July, the robot proved itself against the alleged police-targeting sniper Micah Johnson in a standoff situation. (Source: “Military Robotics Makers See a Future for Armed Police Robots,” Defense One, July 11, 2016.) NOC stock should reach its analyst targets easily before the end of 2016.

Northrop stock is just one, albeit a major one, to benefit from the rise in defense spending. The White House, especially a Hillary Clinton one, will have close links to military contractors, which in turn are benefiting from the world’s rising tensions. If you’d like to learn how to profit from this situation, just click HERE for a report that will explain how to benefit from rising military spending. It’s aptly called “Military’s ‘6th Branch’ to Create 22,000 Millionaires Again?