President Donald Trump gave a primetime speech [last] week in which he announced an increase to the U.S. military presence in Afghanistan.

While he didn’t give many concrete policy changes, it was already widely reported that the president had decided on adding 4,000 U.S. troops to reinforce the 8,500 still serving there.

Interestingly, the market, which has become highly politically sensitive this year, didn’t skip a beat and got back to marching upward the next morning.

Following last Thursday’s selloff, when the S&P 500 posted its biggest one-day drop in three months — breaking its 50-day moving average and barely closing above support at 2,430, then closing the following day at 2,425, its lowest since July 11 — the index found good support just below 2,420.

A few days later, and the S&P 500 is sitting around 2,440.

This is good news for a couple of reasons.

One, you always want to see the market snapback after an abrupt sell-off like the one we just experienced. And two, President Trump’s decision opens up fresh buying opportunities within an already strong sector. I’m talking about defense stocks, especially the technology-based ones.

Leading into President Trump’s speech, the SPDR S&P Aerospace & Defense ETF (NYSEARCA:XAR) had climbed 26% since the close on Election Day, nearly double the S&P’s 13.5%. Looking forward, I expect to see that momentum continue, which is why I’m such a big fan of this trio of defense stocks right now. Here’s what each has going for it.

Defense Stocks Set to Soar: Raytheon (RTN)

Raytheon Company (NYSE:RTN) reported a second-quarter earnings beat on July 27. Earnings of $1.89 a share (versus $2.41 a share last year) came in ahead of consensus of $1.76 a share on revenue of $6.28 billion, also above consensus of $6.23 billion.

Looking forward, management sees full-year sales of $25.1-$25.6 billion compared to previous guidance of $24.9-$25.4 billion.

With RTN shares holding well above their 50- and 200-day moving averages, the technicals are also shaping up nicely.

Defense Stocks Set to Soar: Lockheed Martin (LMT)

Lockheed Martin Corporation (NYSE:LMT) hit a new all-time high on its second-quarter results posted on July 18. EPS from continuing operations was $3.23, besting estimates of $3.11. Revenue climbed to $12.69 billion, also beating estimates of $12.43 billion as beats by the aeronautics, rotary and mission systems and space systems offset a miss in the missiles and fire control business.

For 2017, management raised their earnings outlook from $12.15-$12.45 a share to $12.30-$12.60 a share, and revenue guidance from $49.5-$50.7 billion to $49.8-$51 billion.

Again, the technicals line up nicely with the fundamentals, with LMT stock trading significantly above its 50- and 200-day moving averages.

Defense Stocks Set to Soar: Leidos (LDOS)

Leidos Holdings, Inc. (NYSE:LDOS) took RNT’s and LMT’s cue and also reported strong quarterly numbers on Aug. 4. Adjusted earnings of $1.04 a share beat estimates by 77 cents, and revenue of $2.571 million was above estimates of $2.557 million.

For the full year, management raised their earnings guidance from $3.05-$3.35 a share to $3.45-$3.60 a share, and edged the lower end of their revenue guidance up from $10 billion to $10.1 billion.

While LDOS stock has bounced around since the earnings release, it is holding above both its 50- and 200-day moving averages with good support around $55.

It’s all about finding the right trends to make money in the current market environment, and in this case, the defense trend is your friend. For more on these stocks, as well as my thinking on the broader market, make sure to check out my recent CNBC video clip here.

— Hillary Kramer

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Source: Investor Place