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Back on April 24, I warned that Kim Jong Un was a real-life "Goodfella" - a mobster who operates as though the rules don't apply to him.
And that made me extremely skeptical that Trump and Kim would even meet in a room anywhere, let alone reach some kind of meaningful agreement on the status of North Korea's nuclear weapons program.
Then on May 24, exactly a month after we issued our warning, Trump canceled the summit scheduled for June 12 in Singapore.
I wasn't exactly surprised.
And since Trump's June 1 announcement that the Singapore meeting is back on, I haven't changed my skeptical stance.
There is one thing that has changed - that is, aside from the on-again, off-again, Trump-said, Kim-said nature of this summit.
The truth is, meeting or no, I've become even more bullish on a special basket of stocks I've handpicked for my Private Briefing readers to cash in on the situation in the Korean Peninsula.
I can't share them all with you - that wouldn't be fair to my subscribers - but I'm going to let you in on a few of my favorites...
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We'll Hope for the Best and Prepare for the Worst
Even if you're an unbridled optimist, it's just not realistic to expect a massive breakthrough with Kim should this summit actually take place. I think it's very likely the best we'll get is a framework or agreement for future talks.
China's President Xi Jinping, for instance, recently revealed he'd spoken to Kim and broached the subject of reviving the long-defunct "six-party talks" between his country, North Korea, South Korea, Japan, the United States, and Russia.
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Of course, a lot's changed since those meetings fizzled out in 2009.
What's more, North Korea has a well-documented history of using "sunshine periods," diplomatic thaws, and "agreements to keep talking" as a way of buying time to advance its military goals.
The country's first leader, Kim Il Sung, did it. His son, Kim Jong Il, did it, and there's every reason to believe Kim Jong Un will continue the time-honored Kim family tradition.
The Hermit Kingdom will present its actions as "earnest, good-faith measures," in an effort to look good in front of the rest of the world, but the true motivations behind these steps aren't always so noble.
For instance, the mainstream media framed North Korea's decommissioning and destruction of its only known nuclear test site - a mountaintop facility and complex of subterranean tunnels known as Punggye-ri - as a positive "step in the right direction" ahead of the summit.
But I think Kim's move here is highly suspect for three reasons:
- It's not really clear whether North Korea destroyed all the tunnels, or if the explosions it used to close them up were big enough to make them irreparable. Some journalists were present, but no actual weapons experts were invited.
- This may have been just a smokescreen: After six nuclear tests at the underground site, some of the tunnels had collapsed, rendering them useless. So North Korea was likely looking to build a new test facility anyway.
- This may be more symbolic than substantive: The destruction had nothing whatsoever to do with engine production, missile-airframe manufacturing, warhead creation, or the uranium- and plutonium-processing facilities that create the key "ingredients" for a nuclear warhead.
Simply put: In the absence of any kind of huge, unexpected breakthrough, the United States will still be faced with the stark reality of a nuclear-armed North Korea - one with the ballistic missile capability to threaten the United States, its Pacific territories and bases, and regional allies virtually at will.
And it will have to contend with the high probability that North Korea will continue beefing up its missile program while any talks continue.
So the need for robust interceptor technology isn't going away any time soon. In fact, this tech will need to get better and better to cope with the threat.
That alone would be enough to drive the focus on missile interceptor technology into higher and higher gear. And that will fuel a continued focus on defense technology - and defense spending.
But remember: North Korea is hardly the only country with worrisome ballistic missile capability.
Iran, for instance, has an advanced ballistic missile program. One of Trump's rationales for breaking the nuclear deal was that the agreement was too narrow and didn't do enough to address Iran's missile development. And this week, the Islamic Republic announced it was eyeing a boost to uranium enrichment within the permitted limits of the deal and, more troubling, even higher quantities if the rest of the deal collapses.
China and Russia are still on the threat radar, too, as are any one of a dozen stateless terror groups who'd love nothing more than to land a ballistic, kiloton-range blow against the United States.
Fortunately for all of us, these folks are on the job...
This Is Still the Best Way to Play the Global Missile Race
Back in February 2013, in a piece titled "If This Stock Doubles, Thank North Korea," I warned that Pyongyang's nuclear ballistic missile program was destined to become a huge global security issue. I said it would trigger a big push to develop missile interceptor systems.
Plus, I said that Aerojet Rocketdyne Holdings Inc. (NYSE: AJRD) (then called GenCorp), which makes the rocket motors for missile interceptors, would likely double.
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Well, double it did. And a whole lot more.
And the complex nature of the global missile threat picture means that, for the rest of the foreseeable future, there will be...
- A continued push for missile interceptors: One way to knock down the ICBMs of today is with antimissile rockets. Missile defense batteries are set up in two U.S. locations. And one big beneficiary has been Aerojet Rocketdyne, which is one of the top rocket motor makers in the world. It makes rocket motors for today's interceptors - and also plays a role in the systems of tomorrow.
- Worry about "The Wedge": "The Wedge" is our nickname for hypersonic glide vehicles, the next-generation threat we've been talking about here for years. Unlike ballistic missiles - which go up and come down along a predictable track - HGVs are super maneuverable. And that makes them tough to shoot down. Russia, China, India, and the United States are all working on Wedge weapons. And the Pentagon is also working on an interceptor, something I like to call a "kinetic kill" device. The Pentagon refers to it as the Ground-Based Midcourse Defense (GMD) missile interceptor. In its $9.9 billion budget request, the U.S. Missile Defense Agency is seeking $2.1 billion for the GMD program and an additional $120 million for other hypersonic-missile-defense research. The Boeing Co. (NYSE: BA) is the prime contractor on GMD. And Aerojet makes the crucial maneuvering thrusters for the "hit-to-kill" interceptor warhead.
- A need for a "super radar": This will be a big opportunity for Raytheon Co. (NYSE: RTN), first recommended earlier this year after Russia unveiled a slew of new hypersonic weapons, including purported HGVs. Raytheon gained a mass following during the first Gulf War, when its Patriot missile batteries engaged and intercepted Iraqi Scud missiles. But what I really like is that Raytheon now makes the "X-Band" radar system for the Terminal High Altitude Area Defense (THAAD) missile-interceptor system - kind of a "Patriot missile battery on steroids" that has recently been deployed to South Korea (much to Beijing's chagrin). Indeed, it's the power of that radar system that has China so angry about the South Korea deployment, because Chinese leaders fear this will allow the U.S. military to "see into" their country. The Patriot is to remain in service until 2040, and THAAD even longer. Both are slated for continuous upgrades - a highly lucrative, "wired-in" income stream, in this case for decades, for the contractors who provide them.
- A big demand for drones: Whether they fly, ply the surface of our oceans, look for threats beneath the waves, or even drive on battlefields, the growing security threats we face will ignite a massive spending increase for autonomous vehicles - drones, to you and me. This, too, has been a big hit in the slate of Private Briefing The fact is that the newest budget includes bigger outlays for drones. There's a $912 million allocation for 29 General Atomics MQ-9 Reaper attack drones and $1.16 billion for new Northrop Grumman MQ-4C Triton maritime patrol-and-surveillance UAVs. My paid-up subscribers are getting a special drone play, but every investor should know that Boeing is positioning itself to be a long-term winner in UAVs.
No matter what happens during the Trump-Kim summit in Singapore – and whether it is canceled or not – defense technology that includes missile interceptors and drones is a big profit window for us. And it’s one that I’ll be watching like a hawk.
You can bet on that… and profit from it.
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About the Author
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 at Money Map Press.