$KTOS Set To Keep Climbing On Iran Fears

6 בינו׳ 2020

KTOS looks set to keep climbing as investors rush into defense-related stocks. Kratos Defense & Security Solutions, Inc. provides mission critical products, solutions, and services in the United States. The company operates through two segments, Kratos Government Solutions and Unmanned Systems. The Kratos Government Solutions segment offers microwave electronic products, satellite communications, training systems, modular systems, and defense and rocket support services. The Unmanned Systems segment provides unmanned aerial systems, and unmanned ground and seaborne systems. It serves national security related agencies, the department of defense, intelligence agencies, and classified agencies, as well as international government agencies and domestic and international commercial customers. The company has a strategic collaboration with AeroVironment, Inc. to develop and demonstrate integrated and operationally effective multi-domain unmanned system solutions for near-peer and denied environments. Kratos Defense & Security Solutions, Inc. was founded in 1994 and is headquartered in San Diego, California.

Defense stocks (BATS:ITA) rally following the U.S. airstrike that killed Iranian general Qassem Soleimani, with the case for more defense spending likely to strengthen as conflict in the Middle East ramps up.

"If Middle East conflict were to ratchet up... we think it could be tougher for Democratic Party electoral candidates to argue against a stronger defense budget in 2020," Citi analyst Jonathan Raviv wrote last week.

U.S. defense stocks could again outperform in 2020 as the group typically does well in an election year, notes Buckingham's Richard Safran.

The S&P Aerospace & Defense Select ETF (NYSEARCA:XAR) has returned nearly 29% over the past year, even better than the 25% gain on the S&P 500 during the period.

"Let this serve as a WARNING that if Iran strikes any Americans, or American assets, we have targeted 52 Iranian sites (representing the 52 American hostages taken by Iran many years ago), some at a very high level & important to Iran & the Iranian culture, and those targets, and Iran itself, WILL BE HIT VERY FAST AND VERY HARD. The USA wants no more threats!" President Trump wrote on Twitter.

"The United States just spent Two Trillion Dollars on Military Equipment. We are the biggest and by far the BEST in the World! If Iran attacks an American Base, or any American, we will be sending some of that brand new beautiful equipment their way...and without hesitation!"

On Saturday evening, a rocket fell inside Baghdad’s heavily-fortified Green Zone near the U.S. Embassy, another hit the nearby Jadriya neighborhood and two more rockets were fired at the Balad air base north of the city, but no one was killed.

Increased military spending could make defense stocks a winning trade once again in 2020. The iShares U.S. Aerospace & Defense ETF (BATS:ITA) has rallied more than 70% since Trump was elected on Nov. 8, 2016, while the S&P 500 is up around 50% in that time.

As always, use protective stops and trade with caution.

Good luck to all!