TL;DR

• Defense spending could rise significantly, but most stocks are already expensive
• Boeing and GE show weak valuation setups
• General Dynamics and Northrop require breakout confirmation
• Raytheon shows strong technical momentum
• Leidos stands out as the most compelling opportunity right now

The Setup: A Potential Catalyst

A proposed increase in defense spending to $1.5 trillion could materially impact defense stocks. But before chasing the theme, three realities need to be acknowledged:

1. The overall market is expensive
2. Most defense stocks are already expensive
3. Discipline is critical. Entry timing matters

This is where Structural Valuation Analysis (SVA) becomes essential.

The Weak Setups

Boeing
The chart is trending downward, with fair market value well below current levels. This is not a viable investment setup.

General Electric
After a strong run, GE is trading far above its valuation baseline. A reversion would imply significant downside risk.

The “Wait and See” Names

General Dynamics
Trading right at its Super Growth (SG) resistance level.
No entry until a confirmed breakout.

Northrop Grumman
Similar setup. Sitting at a key breakout level (MSG).
Potential upside exists, but only if momentum confirms.

The Overextended

Lockheed Martin
Trading at extreme valuation levels (12x book).
Even with a breakout, fundamentals don’t support the risk.

L3Harris
Extended far above fair value.
No margin of safety.

The Strong Technical Setup

Raytheon
Already broke out above its Super Growth level.
Clean breakout and pullback pattern.

Potential upside: ~25% toward its next valuation band.

This is what a textbook setup looks like.

The Most Interesting Opportunity

Leidos Holdings
Pulled back to its Super Growth level
Strong positioning in missile defense, a key future growth area

Among all names reviewed, this is the most balanced opportunity between valuation and upside potential.

Final Takeaway

Defense spending may rise, but that doesn’t mean all defense stocks are buys.

Most are:

• Overvalued
• Extended
• Or require confirmation

The real opportunity comes from patience and discipline. The best returns will come from waiting for proper setups, not chasing headlines.

Watch the video here: https://youtu.be/4kghLS6tUEI