If Hillary Clinton Becomes President, Defense Stocks Could Win Big

Hillary Clinton has always embraced a strong defense platform, and it would be safe to say that she is more hawkish on national security in comparison to her peers.

Over the course of this election season, Clinton has collected the most money than any other candidate from contractors in the defense industry. According to Politico, she has accepted at least $454,994 in campaign funds over a 14-month period ending this past February.

The reason for this high amount? Politico explains that Clinton’s large defense-related contributions could possibly be due to “donors at defense-related companies…betting that a Democrat is more likely to win the White House in the fall,” or that “the Democratic Party’s highest elected official, [President Obama], has called for a $2.4 billion increase in defense spending for fiscal year 2017.”

Defense Stance

During her time as Secretary of State, Clinton’s track record suggests she would be more aggressive than President Obama when it comes to using military force. She advocated for the United States’ intervention in Libya, pushed Obama to arm Syrian rebels in the fight against ISIS, and backed Israel.

While on the campaign trail, Clinton has said she plans on cracking down on ISIS, as well as holding China responsible in the ongoing territorial fight over the South China Sea. The Democratic frontrunner has yet to provide any specific defense strategies, but she has used certain phrases and themes during her campaign that give us a somewhat clearer picture.

On her campaign website’s National Security page, Clinton promises to “ensure we are stronger at home;” “stick with our allies;” “embrace all the tools of American power” (i.e. to prevent Iran from obtaining nuclear weapons, and building a strong relationship between Americans and Cubans); “be firm but wise with our rivals,” or in other words, “stand up” to Russian president Vladimir Putin and make sure China is held accountable; and “have a real plan for confronting terrorists.”

Stocks to Watch

What does this mean for the defense industry? Well, in short, some pretty good things.

As a whole, the Aerospace/Defense industry current sits in the bottom 42% of all 265 industries ranked on the Zacks Industry Rank, but could potentially see a much-needed boost if Clinton wins in November.

Clinton’s commitment to making sure the U.S. military is strong, modern, and sophisticated bodes well for defense contractors, as the need for more weapons means more business. Companies like Lockheed Martin (NYSE:LMT) and Northrop Grumman Corp. (NYSE:NOC) could see sales of their F-35 stealth fighter jet and B-21 bomber, respectively, rise if Clinton takes office. Current Pentagon plans call for approximately $400 billion in spending on the F-35 and B-21 as the Air Force is looking to replace its aging bomber fleet.

Boeing Co.’s (NYSE:BA) , one of the world’s biggest aerospace and defense firms, could also see more government contracts coming their way, perhaps for its Airborne Laser, an anti-ballistic weapons system inside a modified 747-400F.

Other defense companies like General Dynamics Corp. (NYSE:GD) , which makes Gulfstream jets, tanks, and warships, and is one of only two contactors in the world equipped to build nuclear-powered submarines; Raytheon Co. (NYSE:RTN) , maker of a diversified line of military products like missiles, radars, and sensors, among others; and Orbital ATK Inc. (NYSE:OA) , which produces and delivers launch vehicles, and supplies ammunitions and related accessories to government agencies, could all too see an increase in valuation and in the number of contracts they receive.

Bottom Line

Investors in the defense industry won’t have to worry too much about the results of the election, because even if Trump wins, the defense budget would likely see an increase as well. But Clinton is an obvious favorite among these companies, and under her administration, the industry would probably get a significant boost in research and spending dollars.