Defense Investments to Buy While President Trump Blasts Share Repurchases

Defense investments to buy while President Trump blasts share repurchases feature recognizable names that should have strong growth potential ahead.

The defense investments to buy while President Trump blasts share repurchases are highlighted by a company that will be receiving a rare $1 billion funding commitment from the U.S. government in the rocket motor business of Melbourne, Florida-based L3Harris Technologies (NYSE: LHX). The funding is intended to guarantee a steady supply of essential motors for a wide array of ​missiles such as Tomahawks and Patriot interceptors.

The defense company, L3Harris Technologies, also seeks to deliver end-to-end technology solutions to connect the space, air, land, sea and cyber domains to enhance national security. The federal funding is the most recent example of the Trump administration taking unprecedented actions to support American businesses that included a gaining a 10% stake in chip maker Intel (NASDAQ: INTC) and investments in critical mineral producers.

The investment follows several days after President ‌Donald Trump criticized big defense contractors for slow production of important weaponry during a time of war, as well as spending large amounts on share repurchases and dividend payouts rather than plant and equipment. L3Harris announced on Tuesday, Jan. 13, that it plans to spin off its rocket motor business into a new publicly traded company backed by the federal government’s $1 billion convertible security investment.

That investment would automatically convert to common equity when the company is expected to complete an initial public offering later this year. A key goal is to produce propulsion systems at an accelerated pace to “significantly increase” capacity to build solid rocket motors to power U.S. and allied missiles.

Defense Investments to Buy While President Trump Blasts Share Repurchases: LHX

Historically, the U.S. government only rarely has invested in American businesses, but the Trump administration has been willing to engage in such direct investments that could produce a positive return on investment. As a seasoned businessman, President Trump has a background is unusual for U.S. presidents.

Citi Research issued a report on Tuesday, Jan. 13, stating its $389 base case price target for LHX uses an average of multiple valuation methodologies that include applying a 15.5x enterprise value (EV)/ earnings before interest, depreciation and amortization (EBITDA) multiple to 2027 EBITDA. The valuation uses historical ranges in conjunction with trading relationships to include factors such as margins, returns, growth and earnings momentum, Citi Research wrote in its research note.

But the company is not without significant risks from heavy dependence on U.S. government customers and spending priorities, Citi Research wrote. Those risks include unilateral contract actions, government shutdowns and shifts in defense budget allocations that could materially impact revenue and operations.

Additional risks include supply chain disruptions that pose another critical vulnerability. Another key risk would stem from any failures in subcontractor or supplier performance that could delay product delivery, increase costs and damage customer relationships across its defense and technology portfolio, Citi Research continued.

Chart courtesy of www.stockcharts.com.

Defense Investments to Buy While President Trump Blasts Share Repurchases: HWM

Jim Woods, who heads the Investing Edge newsletter, recommends Howmet Aerospace Inc. (NYSE: HWM) in the Top 10 Growth Accelerators portfolio in the publication. Howmet Aerospace is a Pittsburgh-based, advanced engineering company that is a traditional defense giant. It may be best known for providing key components in the F-35 joint strike fighter that hits Mach 1.6 under the thrust of potentially the most advanced engine on earth.

Paul Dykewicz meets with Jim Woods, who heads Investing Edge.

The joint strike fighter is built with cutting-edge materials, integrated airframe design and next-generation avionics to enable the fifth-generation fighter jet to operate with potentially unprecedented stealth, speed and agility in air-to-air and air-to-ground combat, company officials said. In developing the complex fighter jet, Lockheed Martin (NYSE: LMT) turned to Howmet to provide key parts that include single-piece, forged aluminum bulkheads that form the backbone of the aircraft structure and save 300 to 400 pounds per jet, while cutting costs by 20%.

The fighter jet also has titanium bulkheads and uses titanium to manufacture other airframe structures for all three F-35 JSF variants. Howmet further supplies single-crystal, nickel-based super alloy blades and vanes that operate in environments hotter than the melting point of the metal to propel the engine.

Howmet has soared 90.89% during the past year and nearly as much since Woods recommended it on January 15, 2025.

“The present and future of armed conflict is drones, and Howmet Aerospace makes the engine and guidance components that make those drones fly,” said Woods, whose resume includes a stint in U.S. Army special operations.

Howmet is one of two defense stocks he recommended on January 15, 2025, just before they both took off and produced large gains.

Chart courtesy of www.stockcharts.com.

Defense Investments to Buy While President Trump Blasts Share Repurchases: KRMN

Karman Holdings Inc. (NASDAQ: KRMN) is another buy recommendation of Citi Research. The investment firm gives it a $123 base case price target using the average of multiple valuation methodologies. The multiples are justified, based on historical valuation ranges, as well as trading relationships to fundamental factors such as margins, returns, growth and earnings momentum.

Geopolitical Risk 

Conflicts are causing increased military action by countries around the world. For example, a ceasefire in Ukraine could result in Britain and France engaging in a historic pact to put peacekeeping troops on the ground in the war-torn country that Russia invaded nearly four years ago. The peacekeeping agreement, signed at a summit in Paris by French President Emmanuel Macron, U.K. Prime Minister Sir Keir Starmer and Ukraine President Volodymyr Zelensky, could bring what has been called the “coalition of the willing” into a peace keeping role.

President Trump and his administration are supporting that initiative, as he seeks to forge peace agreement between Ukraine and Russia. But Russia’s role as the aggressor and demands to receive additional land beyond what it has seized on the battlefield is a continuing block on progress. Recent polls indicate roughly 75% of Ukrainians who responded oppose offering any land to Russia. The opinion poll reflects the sacrifices endured by Ukrainians to defend their freedom and protect against Russia’s sustained assaults.

Claims by Russia’s leaders that they seek peace so far belie the reality of attacking non-soldiers, including Ukraine’s mothers and children who continue to be killed and injured severely. Rather than killing, President Trump is advocating prosperity that usually occurs for countries that have the greatest freedom. Mark Skousen, PhD, the Doti-Spogli Chair of Free Enterprise at Chapman University in Orange County, California, is a free-market economist who travels the world to praise freedom as a conduit to open opportunities for economic growth across the globe.

Mark Skousen heads Forecasts & Strategies.

President Trump has asked other countries to boycott Russian oil to reduce funding of the attacker’s war machine. The idea has gained support, but not enough to stop the war thus far.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. Follow Paul on Twitter @PaulDykewicz.