One of the Best Defense Stocks to Buy Today

Aerospace and defense stocks are in the spotlight this year following the multiple terrorist attacks we've seen across the globe, from London and Paris to the Philippines. Nuclear saber-rattling in North Korea is certainly a worry, as well.

stocks to buy todayBut not every defense pick is a winner, which is why we're bringing you one of the best defense stocks to buy today...

The multiple attacks have led investors to pile into the defense sector, causing it to outperform the broad market. For example, the PowerShares Aerospace & Defense Portfolio exchange-traded fund (NYSE: PPA) is up roughly 10% year to date compared to 7.2% for the Dow.

Research shows a good deal of any stock's performance is due to the fortunes of its sector. The theory is that if there is enough business to power the sector higher, then there should be enough to spread around to most of the companies within.

Think of it as "the rising tide raises all boats" on a sector level.

And that is why we're looking at the defense sector for investment opportunities.

Indeed, defense is one of Money Morning Chief Investment Strategist Keith Fitz-Gerald's best profit plays for the year, as he wrote here in January. Keith says the trick to making huge profits is to find "must-have" companies that fall into what he calls the six "Unstoppable Trends," one of which is "war, terrorism, and ugliness" (also known as defense).

The "Unstoppable Trends" are backed by trillions of dollars that Washington cannot derail, the Federal Reserve cannot meddle with, and Wall Street cannot hijack. Even if the S&P 500 stumbles, unstoppable sectors such as defense may dip but will come roaring back because the underlying reasons for their success will not have changed.

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Fitz-Gerald said that there is now an unexpected - and uneasy - three-way détente between Russia, China, and the United States that is driving a fundamental shift in defense contracting.

Specifically, there is a huge demand for large-ticket items and high-end, high-capability systems such as heavy bombers, capital ships, and weapons systems. This has also grown to include cyber and electronic capabilities.

"That's good for nearly half a trillion dollars in spending," Fitz-Gerald said.

And this following pick is one of the best defense stocks to buy today to profit.

This Is One of the Best Defense Stocks to Buy Now

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Fitz-Gerald's favorite defense stock now is Raytheon Co. (NYSE: RTN). Founded in 1922, the company now has more than 63,000 employees around the world and is the world's top producer of guided missiles.

What company made the 59 Tomahawk missiles used to strike Syria in April? None other than Raytheon.

The company is a leader across the defense industry with billions in contracts with the U.S. government. And with U.S. President Donald Trump's plan to shore up defense spending, that figure could skyrocket. In March, Trump proposed a $54 billion hike in defense spending.

But Raytheon's customers are not limited to only domestic sources. It has a diverse base where international customers make up just under half of its business. That means even if a few countries cut defense spending during an economic collapse, RTN still has plenty of other business to help it weather the storm.

Not only is Raytheon a traditional defense-contracting juggernaut, but it has already expanded its cybersecurity capability. On both fronts, Raytheon stands at the head of the class.

Last year, the company completed a series of acquisitions in the cybersecurity business with the $1.7 billion purchase of a controlling stake in Websense Inc. It was then merged with Raytheon Cyber Products to form a company called Forcepoint. And Forcepoint is already ranked No. 3 on Cybersecurity Ventures' Cybersecurity 500, the list of the cybersecurity companies to watch in 2017.

In its April 27 report of first-quarter earnings, Raytheon announced an 18% increase in profits from the first quarter a year ago. And it handily beat Wall Street estimates by 8%.

With all that in mind, now is still a great time to invest in Raytheon, even though the stock has been steadily advancing for the past six years. Indeed, buying dips along the way has proven to be a good strategy, and that is why this week's stock weakness is a gift to investors from the market.

RTN stock has climbed nearly 13% year to date. And that could just be the start for this stock. The average price target for RTN is $172.55, which would be an 8% gain from today's price. One analyst has a price target of $187 per share, a potential gain of 17%.

Up Next: The 7 Best Dividend Stocks to Buy in 2017

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