Three Defense Stocks to Buy as Tensions in Iran, Venezuela, and North Korea Linger (One Could Double Your Money)

While ongoing trade discussions between the United States and China dominate the headlines, the drumbeat of military action has intensified...

This week, the United States sent an aircraft carrier to the Middle East after reports of a planned attack on American forces by a Tehran-backed proxy group in Iran.

On Sunday the Trump administration issued a surprise order to send the USS Abraham Lincoln and a bomber task force in response to "troubling and escalatory indications and warnings."

Once again, military intervention is back in the headlines.

For weeks, much speculation has emerged that the U.S. may also use its military to help overthrow Venezuelan dictator Nicolas Maduro.

Meanwhile, North Korean leader Kim Jong Un recently permitted another missile test. This event has raised new concerns that the U.S. and North Korea are still far off from a denuclearized Korean peninsula.

The rise in tension coincides with the Trump administration's efforts to bolster military spending in the 2020 budget by 5% to $750 billion.

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This puts U.S. defense stocks back in focus.

To find the best defense stocks to own right now, we use the Money Morning Stock VQScore™. This proprietary system tells us when stocks are about to break out to higher levels (and which to avoid in order to protect our capital).

Each stock receives a score. A score of 4 or higher puts the stock in our "Strong Buy Zone."

Today we discuss three defense stocks to buy as tensions heat up around the globe...

Defense Stocks to Buy, No. 3

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Our first stock with a rock-solid VQScore is Raytheon Corp. (NYSE: RTN).

Raytheon narrowly edges out General Dynamics Corp. (NYSE: GD) as the third-largest U.S. military contractor by market capitalization.

RTN is a massive supplier of missiles to the American military. It is also renowned for its radar, sensor, guidance, and cybersecurity systems.

The company stands to be a winner with the Trump administration's goal of advancing military systems...

The U.S. Navy recently awarded the firm a four-year, $402.6 million contract to establish

three air and missile defense radar systems. Its new defense system will provide radar for the country's DDG 51 Flight III destroyer ships. That award is on top of a $358 million award Raytheon received from the Department of Defense.

Raytheon has historically been a stock to buy on the dip. Shares have consistently bounced back from short-term downturns. Currently, Raytheon shares are priced just under $179 per share.

But the stock has significant upside given ongoing global tensions and the coming benefits from an uptick in U.S. military spending.

With a VQScore of 4.45, we have a price target on Raytheon of $235.23 per share. That figure represents upside of roughly 31%.

Defense Stocks to Buy, No. 2

Huntington Ingalls Industries Inc. (NYSE: HII) is the nation's largest builder of U.S. Naval ships and is sitting in our "Buy Zone" with a 4.75 VQScore.

The reason is simple: HII stands to benefit from a series of purchases from the Pentagon, as the Trump administration aims to expand America's presence on the global seas.

The firm was a subsidiary of Northrop Grumman Corp. (NYSE: NOC) and spun off from its parent in 2011. And to say that it has a big hand in in the U.S. Navy's operations is an understatement...

Huntington Ingalls says it has built 70% of the U.S. Navy's current fleet. Now, it's going to increase as the Navy plans to expand its fleet from 287 ships to 355 ships.

The company's new contract for two aircraft carriers (worth $15.2 billion) now brings its record backlog to a mouthwatering $41 billion. This is the highest backlog since the stock went public in 2011. CEO and President Mike Petters said last month that these contracts alone will create stability for the company over the next decade.

That carrier investment alone is more than half of the expected $28.9 billion price tag that the Congressional Budget Office has estimated for new ship construction.

Huntington Ingalls is a powerhouse company with a stock poised to break out based on its VQScore of 4.75. The business currently trades for $205 per share.

But a realistic price target for Huntington - based on positive trends and what looks like solid momentum on the horizon for the industry - is $300. That figure represents an upside of 46% from today's price.

Defense Stocks to Buy, No. 1

Finally, our top defense stock to buy is Astronics Corp. (NASDAQ: ATRO).

Now, you probably haven't heard much about them before...

Astronics is a supplier to Boeing Co. (NYSE: BA) and has naturally taken a bit of a hit due to the grounding of 737 MAX aircrafts. The good news is that Astronics has nothing to do with the anti-stall system and government investigation into Boeing.

Despite the ongoing uncertainty around Boeing's 737 troubles, Astronics is showing signs of an improving balance sheet. The firm will soon experience greater cash flow due to the need for less investment in its AeroStat, CCC, and Armstrong businesses.

The company is also a leading player in an industry that is seeing greater demand in the skies: modem Internet. The company's Ku-band antenna has been chosen by Satcom Direct's Experience, which transitions business jets' WiFi from dial-up to modem-level speeds.

Astronics currently trades at $38, which could be a bargain based on its top VQScore of 4.75. Once Boeing can sort its 737 problems out, ATRO shares will receive a boost.

But the company will also benefit from the pending uptick in military and defense stocks, as geopolitical tensions rise around the globe. We see upside of $78 per share for the New York-based company. That figure represents a potential gain of 105% from current levels.

Secret Weapon Set to Foil China's Master Plan: The South China Sea is about to get violent, and the Chinese have an alarming new superweapon they think gives them the upper hand. Or at least that's what their war hawks think. But they couldn't be more wrong. Thanks to a small $6 U.S. defense contractor with a top-secret technology, the Pentagon has an ingenious new checkmate move designed to stop a Chinese sneak attack dead in its tracks. Click here to learn more...

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