Motley Fool june 26, 2017: “One investment idea for FY18 that...

Motley Fool june 26, 2017:

“One investment idea for FY18 that you’ve probably missed

This investment idea is based on gaining exposure to rising defence spending by governments around the world at a time of increasing threat from terrorism and geopolitical tensions, which includes the militarisation of China that is sparking an arms race in the region.

Don’t forget the pressure placed by US president Donald Trump to force NATO partners to spend more on defence too.

The Australian government is also feeling the heat. It has committed to lifting its defence budget to 2% of Gross Domestic Product (GDP) from around 1.5%. This would put the Australian government’s defence spending on track to hit $42 billion by FY21 – a 54% increase from FY16.

The biggest problem to riding this global investment thematic is stock selection. The ASX has a pretty shallow pool of stocks that are directly related to defence
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The third stock idea is weapon and space defence technology company Electro Optic Systems Hldg Ltd (ASX: EOS). The company recently confirmed it has won a $170 million contract to supply weapon systems to Orbital ATK – a NASDAQ-listed aerospace and defence technology company.
While the stock has nearly doubled in value over the past year and is trading at $3.14, it probably still has room to climb given its market cap of $191 million and the size of its addressable market.”