A new military anthem?

Ordinarily, that wouldn’t seem so exciting.

After all, our nation’s history is rich with such songs. Between military and patriotic anthems, there must be dozens of them.

But the way I hear it, this new song sounds like money — lots of money.

You see, the U.S. Space Force just released its new anthem. It’s called Semper Supra (Always Above). Here are the opening lyrics:

To the Moon, to Mars 
Into space, far beyond 
The future of our country lies in the stars 
We march onwards 

I’m not sure how we’re supposed to “march” in space. But the point is still clear: this new anthem represents the U.S.’s growing commitment to Space.

The thing is, Space is truly a massive market. Banks including Citi and Morgan Stanley are projecting it will be worth $1 trillion by 2040.

So today, I’ll show you a way to cash-in on the new “Space Race”…

The Race to Defend Space

First things first: it’s important to understand this isn’t just a race to conquer space…

It’s also a race to defend Earth — or at least, many countries’ interests on Earth.

That means America’s trillion-dollar Defense sector will be involved. After all, we need to protect our space-related interests against countries including Russia, China, India, and Japan.

Two areas are of particular interest:

1. Establishing secure, reliable communications so ground control can talk to objects in space, and so objects in space can talk to each other.
2. Creating a web of interconnected satellites that can monitor threats, mission-critical flights, and battlespaces.

These areas are the focus of Defense and Aerospace companies, two high-risk industries. After all, these companies need to create products that are reliable and high performing. That’s a lot to ask of any company, let alone ones building products for outer space.

The thing is, companies that can meet expectations can become very valuable…

Including one that’s been a go-to Defense company since 1890…

Introducing L3Harris Technologies

L3Harris Technologies (LHX) is a key supplier of secure communications equipment for the military, providing assets including radios and walkie-talkies.

But its specialty is equipment for ISR — Intelligence, Surveillance, and Reconnaissance.

The company operates four divisions:

1. Integrated Mission Systems.
2. Space and Airborne Systems.
3. Communication Systems.
4. Aviation Systems.

And it has a robust portfolio of satellite technology for civilian, military, and intelligence uses — everything from tracking missiles to providing weather and secure communications.

Located twenty miles south of Cape Canaveral, LHX’s headquarters are situated in what’s known as the Space Coast of Florida. Yet surprisingly, this company doesn’t receive the same fanfare as the bigger defense contractors.

But that’s fine by me. Because this company isn’t focused on making headlines. It’s focused on maintaining a dominant position in the markets it works in.

And by winning four billion dollars’ worth of contracts in just the past two months, it’s certainly proven that it can achieve that.

How L3 Established Dominance

In 2018, LHX merged with L3 Technologies to become the sixth-largest defense company in the U.S. It now has customers in more than 100 countries, and a workforce of nearly 50,000.

The goal of the merger was to take two niche communications players with complementary skillsets and turn them into one big player — one that could win defense contracts outright, as opposed to being relegated to a subcontractor.

That merger is paying off handsomely:

Since August 1, LHX has worked with aircraft manufacturer Air Tractor on a three-billion-dollar deal to build attack planes for U.S. Special Operations Command.

In September, it won a $700 million contract to build satellites to track hypersonic missiles.

It then won a $380 million deal to build systems for the U.S. Navy.

But the biggest news about LHX doesn’t involve a new contract…

Creative Problem-Solving Can Move a Stock

You see, supply-chain issues have made it challenging for many defense contractors to get access to computer chips. And LHX is no exception.

To solve this problem, LHX reached out to its existing customers and bought back the equipment they weren’t using. Then it could re-use the chips from those products for its current products.

This type of creative problem-solving is encouraging for investors to see. It says a lot about the company’s leadership.

No wonder the company’s stock has been on the move. Since bottoming on September 30, it’s up more than sixteen percent. By contrast, the S&P 500 is only up around six percent over the same period.

With our nation’s sights set on space and security, you can count on LHX to help us ride these mega-trends for the long-term.

Cheers and Good Investing,

Chief Investment Officer
Trend Trader Daily

Tags: defense outer-space