Investors are buying defense stocks as Middle East conflict worsens
(This is a wrap-up of the key money moving discussions on CNBC's "Worldwide Exchange" exclusive for PRO subscribers. Worldwide Exchange airs at 5 a.m. ET each day.) Investors are looking for opportunities in defense. They are also exploring the value trade while navigating geopolitical uncertainty from Middle East tensions. Worldwide Exchange pick: RTX Kevin Simpson of Capital Wealth Planning said defense stock RTX is a solid buy because of the conflict between Israel and Iran as well as its current valuation. "This is a 17 [price-to-earnings] multiple, so good value with a growth component. [It] pays a 2% dividend so you are getting paid while you wait," Simpson said. Other names tied to defense and oil, such as Northrup Grumman and Halliburton, also moved higher in the premarket. Simpson said there could be risk in trading on headlines, adding: "This whole space is butting up against all time highs … so you want to look at multiples make sure you aren't chasing something." "But you need to have at least one or two names for a diversified portfolio." Geopolitical uncertainty and the value trade Callie Cox of Ritholtz Wealth Management believes there are opportunities in value stocks, specifically those that offer dividends and are tied to the recent rise in oil. "We're always looking at value stocks because we want to maintain stability and consistency in our client portfolios," Cox said. "Energy stocks are a big component of the value trade. If you think this Iran conflict will end up raising oil prices then you want to be in value stocks." "Dividends are another interesting strategy to think about when growth is slowing and definitely when inflation is moving higher," Cox said. Tech ETF hits all-time highs Mark Hackett of Nationwide sees the Technology Select Sector ETF (XLK) hitting all time highs as a sign of increasing defensive positioning. "When the technical rallies happen investors tend to gravitate towards tech, in general tech has been defensive as well," said Hackett. "But generally when you get through the technical rally we have seen over the last few months, you are going to have to look at fundamentals and frankly the valuations there are very extended." The fund reached record levels on Monday. Several XLK members also hit record highs on Monday, including Palantir and Jabil. The former trades at 229 times forward earnings and is up 87% this year. The latter has rallied 35% in 2025 and trades at a forward multiple of 18.
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