One Stock Play for Two Growing Missile Threats

William Patalon III

We've given you many reasons to like Aerojet Rocketdyne Holdings Inc. (NYSE: AJRD), a company whose stock we recommended at $11.40 a share back in February 2013, when it was still known as GenCorp Inc.

Now we're about to give you two more.

They're both "ripped from the headlines."

And they both underscore why a stock that's given you a peak gain of better than 100% since we first told you about it still has plenty of room to run.

So let's take a look…

An Old Threat Is New Again

I told you I'd share two reasons the rocket engine maker's shares will keep surging.

Here they are…

In the first of the two, Russian President Vladimir Putin this week said he would boost his country's stock of nuclear-tipped intercontinental ballistic missiles (ICBMs) by 40 by the end of this year.

And in the second, Saudi Arabia says it used a U.S. Patriot missile to shoot down a Scud missile fired from Yemen.

The Patriot missile – an "interceptor" – is powered by a solid-rocket motor made by Aerojet.

And the growing world arsenal of ICBMs – like those promised by Putin – will force the U.S. military to boost its investments in advanced missile interceptors. And many or most of those, too, will be powered by Aerojet rocket motors.

Rocket motors have become a "growth industry" – just as we said they would in the April report "Missiles of October, Missiles of Pyongyang – and the One Stock to Buy."

That's why we're following the missile programs in North Korea, Iran, and China.

And it's also why we continue to recommend Aerojet as a long-term investment.

Especially since – as we've shown you here already today – our investment thesis just got a big boost.

Surprise "First Strike" Capability

As we've said in our reports to you, there's been a gap between the "official" assessments of North Korea's missile capabilities and what other non-U.S. military experts believe the country is capable of.

Officially, North Korea's missiles were said to have ranges too short to reach the United States. And North Korea's nuclear and warhead know-how were not yet advanced enough to top those missiles with megaton potential.

But a recent report now says the Hermit Kingdom has actually achieved some major advances in the last several years.

According to the membership organization and news website Military.com, U.S. Army Gen. Curtis "Mike" Scaparrotti – the U.S. commander in South Korea – in April told the U.S. Senate Armed Services Committee (SASC) that he believes North Korea has the ability to fit a nuclear warhead to a long-range missile capable of hitting the U.S. mainland.

"I believe they've had the time and the capability to miniaturize" a nuclear weapon to arm North Korea's new KN-08 intercontinental ballistic missiles, Gen. Scaparotti said. "We must assume they have that capability" of hitting the United States.

U.S. Navy Adm. Samuel J. Locklear, head of the Pacific Command, also testified – and agreed with Scaparrotti's assessment. But Adm. Locklear said the North Koreans had yet to test the KN-08, which also goes by the names No-dong-C and Hwaseong-13.

The worry here, of course, isn't just having the ability.

Join the conversation. Click here to jump to comments…

William Patalon III

About the Author

Browse William's articles | View William's research services

Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.

… Read full bio