If You Missed the AI Boom. This is Far Bigger.

Everyone is freaking out over Trump's proposed $1.5 trillion defense budget, but I found a bigger story buried inside that number. The US is scrambling to refill its missile stockpile, and the coming production boom could send five stocks doubling over the next year. Everyone knows the big names like RTX and Loheed Martin. I'm going to reveal the five stocks you haven't heard of, but need to be buying right now ahead of this surge in missile tech. I've already highlighted RTX, ticker RTX, and Loheed Martin, ticker LMT, as key players in this theme last year, with both those stocks up 33% since that video. But for this update, I wanted to dig deeper here into those less talked about stocks, the companies with critical components for propulsion steering electronics signal processing, and guidance. Components that are going to see a boom in orders over the next few years. That boom in orders comes from a massive shift in modern warfare. Only evident over the last few years in Ukraine and the war in Iran. More than ever, weapons deciding the conflicts are going to be those precisiong guided missiles, tomahawks for longrange strikes, and the Patriot and THAD interceptors protecting troops and cities from those incoming missiles. The problem is we were not ready for this shift, and we're burning through these weapons faster than we can replace them. The Center for Strategic and International Studies estimates expenditures of US air and missile defenses has more than doubled over the first 7 months of this year. That Iran conflict alone consumed roughly half of America's pre-war stockpile of key missile interceptors and a third of our Tomahawk inventory. And of that critical Patriot Defense missile system, we have less than a quarter of the preIran and Ukraine inventory. That is forcing an historic production ramp. City estimates US missile production is going to jump from roughly 2500 annually to more than 6,000 within the next few years. The Pentagon is targeting nearly triple the production capacity for those Patriot Pack 3s and four times the capacity for THAAD interceptors. This isn't simply rebuilding what we've already used. Missiles are becoming the weapons of choice in modern warfare. And America is rebuilding on a production scale we haven't seen in decades. The biggest names in aerospace and defense may already be up, but it's the component players that are going to see that surprise boom in orders that nobody is talking about yet. And first up here is Duke Commune, ticker DCO, smallest of the group here at just $2.7 billion market cap, but which shares already up 95% over the last year and potentially with the biggest upside yet with exposure to to so many different missile systems. Duke commune makes structural components and electronic systems used in more than a dozen major weapons platforms including the PAC 3es, Tomahawk, AM RAMs and SM2s, SM3s and SM6 missile families. And we are already seeing that production boom hit these numbers. A Duke community reported revenue from its military and space segment up 7% in the most recent quarter to 124 million. More importantly, with over 720 million in booked orders, enough to boost growth into the double digits for this group. management specifically pointed to RTX and Loheed Martin increasing their production across PAC 3, THAAD, Tomahawk, Amaran, and the standard missile programs. And that is what makes DCO one of my favorites here. Instead of trying to predict which missiles get the biggest contracts, you're buying a relatively small company supplying components across all of them. The company has an aggressive plan to grow revenue to a billion dollars at the same time improving profitability to 18% IBIDA margin through next year. On a roughly $2.7 billion market cap, this production ramp has the potential to to move Duke Commune's overall growth much more than it would maybe a larger company like Lockheed or RTX. I'm also watching Moog Inc. ticker MOG. Either the A shares or the Bshares. They're critical in how you steer those missiles. Moog specializes in precision motion control systems, including the actuators controlling the missile fins along with thrust vectoring and divert and attitude control systems. The company says it has delivered more than 1 million systems across dozens of missiles and defense platforms. Moog books 52% of revenue from defense with space and defense segment topping $1.1 billion in sales and seeing strong growth from those geopolitical tensions. MOO recently won a contract worth more than a hund00 million dollars from Lockheed for its PAC 3 MSE system, one of the largest awards ever for the company's defense division to supply the electromechanical actuators that precisely steer the interceptor towards its target. And as an upside kicker to the stock, the company's industrial and medical division is also driving growth. Moog booked nearly a billion dollars in sales from the segment and is producing liquid cooling pumps for data centers in that AI buildout boom. Total sales here were up 15% in the last quarter to 1.1 billion with the space and defense segment posting 17% growth and a strong backorder of business. It is this specialized expertise that is an advantage here for Moog and all these companies. These aren't generic components that you can replace by the lowest bidder. These are precision systems that have to be qualified for individual weapons programs, which means long-term contracts and growing revenue. We'll get back to those stocks next, but first I want to thank today's sponsor, Clover. Because doesn't it always seem like those unexpected expenses come in bunches? One week it's a car repair, then something breaks around the house, and suddenly you're counting the days until payday. In our family, the wife's battery went out on her car a few weeks ago. Another $380 bucks on top of the $700 in tire problems we've been having over the last few months. Emergency expenses we couldn't have possibly planned for. And that's where Clover can give you a little breathing room. Clover is an earned wage app where you can access up to $750 for money you've already earned before payday. It's not a loan. There's no credit check, no interest, and no late fees, and no hidden fees. I like that because most of the time you don't need a loan. Just need access to your own money a few days earlier to cover those groceries, the gas, or that surprise bill. So, if you're short on cash, and we all are from time to time, access up to $750 with no credit check or late fees. Click the link below or just scan the QR code here so they know I sent you. Back to our list and quite a bit bigger than those first two stocks is L3 Harris took her LHX at a 48 billion market cap, one of the major US defense contractors and critical in propulsion systems for these missiles. The 2023 acquisition of Aerojet Rocket Dine gave L3 Harris one of America's critical rocket motor businesses. The company has since created a dedicated missile solution segment, combining these capabilities, supplying propulsion for pack 3, THAD, Tomahawk, standard missile, and other weapons. And that ramp up is big for this one. L3 Harris and the Pentagon are working towards roughly tripling Pack 3 propulsion capacity and quadrupling THAD propulsion production under the 7-year agreement. L3 Harris also received another nearly $400 million THAAD propulsion contract earlier this year. Missile Solutions revenue is growing at a 14% pace even as the company is maintaining its profitability in the segment with a 12% operating margin. Overall, management is guiding to 9% revenue growth to 23.7 billion this year and a solid 16% operating profitability. And Mercury Systems, ticker MRCY, is another smaller company at just over $5 billion market cap, which again means these giant defense spending contracts would go a long way to boosting these shares. Mercury here moves us beyond the mechanical components to the computing behind the modern missile tech. The company makes ruggedized processing, signal processing, RF and secure computing systems used throughout the defense industry. It's a market size over $50 billion and the company is key provider to those systems integration to modules and component production. Overall revenue growth here is only expected to be about 10% at this point, but new contracts like a recent L3 Harris deal should take it much higher. Honeywell Aerospace, ticker HA, at $51 billion market cap, is the largest on our list and just started trading in June after spinning off from the larger conglomerate. Now, Honeywell is the least pure play in our group for this missile theme. Though 41% of the company's sales are from its defense and space segment, and the company is a key supplier for navigation, inertial systems, guidance, power, and actuation technologies across multiple missile programs. The lottery ticket though could be the proposed Golden Dome system here in the US, an integrated space, air, and land defense system in which Honeywell is going to play a strong role. And while it's not the pure play some of these others are, there's another reason to take a look at Honeywell. It stumbled badly since the spin-off with a disappointing quarterly report and some supply chain issues. That means shares are down 19% from the spin-off price and 45% from the peak. So, there could be some rebound potential on that growth and investor sentiment. Now, I'm going to rank each of these next, but I don't want you to think this is a sure thing bet because it never is in investing. Defense budgets are political, and a change in Congress could slow spending. I think even with that happening, it's clear that missile production needs a next level increase just to clear the shortage from this year. But that change in Washington could have investors exiting these stocks over the near-term headlines. Now, valuations do matter here as well with a big run in some of these stocks already. So, I want to look for growth, profitability, and where to get the best deal on your investment. And that means, while I like all five of these on that boom and missile production, I wanted to compare them against each other on that growth, profitability, and evaluation to rank them for the best buys right now. Here we see each of these side by side. DCO, Moog, Inc., L3 Harris, Mercury Systems, and Honeywell Aerospace. A DCO and Mercury are by far the smaller companies at just 2.9 billion and 5.5 billion dollars, less than half the size of even the next largest. So maybe just on the scale of this missile production theme and the potential for blowout revenue, I'd be watching these two smaller companies. As shares of Duke Commune are already up 96% over the last year with MRCY up 32%. So we will have to watch valuations there. Muggy Inc. Tooker MOG is up 92% and the Lagards LHX and Honeywell are actually down for the year. On growth here and looking at analyst expectations, all are expected to post singledigit revenue growth. So could be that low bar to beat in light of this boom in production. Honeywell is so new we don't even have forward estimates for its revenue, but we do see it posted 12% growth over the last year, second only to 15% growth at MOO. What I really like here though is that these companies are leveraging up into that earnings growth. Comparing the Ford EBID estimates, so the forecast for core earnings before interest, taxes, and depreciation, we see that each of these is leveraging that revenue growth into higher growth in profits. DCO is expected to more than double its revenue pace to a 15% increase in earnings. But most impressive here, Mercury is turning 9% revenue growth into 27% earnings growth. On profitability, L3 Harris and Honeywell are doing the best at converting that revenue into earnings. nearly 20% profitability on that ebidom margin basis. Mercury is a little disappointing here with its lasting class 8% margin. Yeah, if it had a better margin here, that would have locked in MRCY as one of my favorites. But on this profitability, it's still an even race across the board. So then all this has to come down to valuation. Where are you getting the best deal for this growth and the earnings? Now, the runaway stock price for DCO, MOG, and MRCY have made those expensive relative to the LHX and HA here, but it's hard to deny that profitability and the earnings growth story. At 54 times on a price to earnings basis, Mercury is the most expensive here. But that 27% earnings growth forecast still has it on my list to buy. I think Honeywell, ticker HA, is also a good buy here at just 21 times that PE ratio. It's the least expensive and it has the profitability to turn this growth story into profits. Get your money when you need it with Clover and the link in the description below. Up to $750 before your paycheck. Don't forget to join the Let's Talk Money community by tapping that subscribe button and clicking the bell notification.