Who will be the winning companies after the increased NATO budget

If we track Trump's commercial behavior from him presidential election win, we will see a line on which he moves all the time. After winning the presidential election, the first thing he has taken is to visit two of the richest economies in the world, China and Saudi Arabia. There, he signed multi-billion-dollar US arms sales deal, which gave extraordinary support to the defense sector. It is now obviously the EU's order to devote most of its budget first and then to target the purchase of US military equipment. Wherever we look at this news, the US as a leader in NATO will benefit the most.

Today, the Alliance members agreed to allocate 2 percent of GDP to the organization's budget more quickly than before, with commitments expected to increase over that share in the future. At present, five of the 29 NATO members have achieved the defense spending target of at least 2% of GDP, including the United States spending 3.5% and the UK by just over 2%.

The foundation for the growth of the defense sector is present, let's look at where it is in general and which companies to target in order to make the most of the situation.

SP500 vs. US Defense Sector

Comparing the price movement between the SP500 and the US Defense Sector, it is clear that the defense sector in the US is underestimated, and given the good prospects it is good to buy an ETF that combines a large number of companies in the sector or to target the following:

Lockheed Martin - LMT. The company is on a rising trend ... as it is on the market (1995), with financial and performance figures more than excellent. The current adjustment gives us a profit of over 15% if the price fails to overcome the previous peak formed at the end of April.

Northrop Grumman - NOC. Like Lockheed, the upward trend has been in place for more than 10 years, and the current adjustment gives us a good chance to realize just over 10% of the previous peak. With the recent acquisition of Northrop Grumman for $ 7.8 billion by ATK Orbital (OA), NOC is now a major player in the production of rocket systems and satellite components.

Raytheon - RTN. With China and Russia as a major competitor and their supersonic weaponry developments, RTN is ready to take advantage of progress in terms of contracts and state subsidies. Whether it is a threat from North Korea's nuclear program or the supersonic Russian rocket, Raytheon is well-equipped to help the military to resist the technological advances of US rivals.

With less impact on profits, we expect the increased budget to help Boeing and Airbus.

Here's where to look for profit in Q2 - the reporting season

Chart: Used with permission of Bloomberg Finance L.P.

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