A tidal wave of cash is headed towards this high tech sector. How to get your share of it.

Today’s issue in preview:

• A tidal wave of cash is headed towards this high tech sector. How to get your share of it.
• The mainstream media is wrong. Here’s hard proof the American consumer is doing well.
• Our hot hand continues: Oil stocks, pipeline stocks, and critical mineral stocks reach new highs.

A tidal wave of cash is headed towards this high tech sector. How to get your share of it.

Credit: Greg Meland

In January, National Defense magazine reported that global defense spending is on pace to reach a colossal $2.6 trillion in 2026. This total would represent an 8.1% increase over 2025.

Regular M&M readers know this tidal wave of cash is driving a bull market in high-tech defense stocks that is full of opportunity.

For example, large cap defense contractor Lockheed Martin (LMT) is up 33% year-to-date (YTD). Fellow defense contractor Northrop Grumman (NOC) is up 25% YTD. The iShares U.S. Aerospace & Defense ETF (ITA) is up 61% over the past 12 months and recently struck an all-time high.

This is all good news for anyone who followed our recommendation to invest in the defense spending megatrend.

Defense spending is booming for several reasons. The U.S. and China are in a “great power” competition for power and influence. Donald Trump is forcing Europe to spend more of its own money on defense. Plus, the rate of technological progress is so fast that today’s cutting edge weapons systems are quickly outmatched by tomorrow’s, forcing governments to spend more to keep up.

Given this strong fundamental tailwind, it’s no wonder that high-profile, large-cap defense stocks are booming. But don’t forget about low-profile, small-cap defense stocks. There’s opportunity here as well.

Your average small cap aerospace and defense firm does not make the front of the Wall Street Journal. CNBC does not cover its quarterly earnings announcements. However, this type of firm supplies critical components that the defense industry cannot function without. Flight control systems. Missile guidance system components. Rugged communications and surveillance gear for soldiers. Aircraft carrier parts.

As the defense industry booms, these small but critical players could see their market values rise by hundreds of percent. Some under-the-radar companies poised to do well include:

Innovative Aero (ISSC): ISSC is a $400 million company that supplies key systems like displays, sensors, navigation tools, and flight controls for military aircraft. ISSC is modernizing the cockpit by taking old military planes, and turning them into high tech, digital flight decks. ISSC also recently acquired Moog, which is bringing it into the physical movement of the plane’s wings and tails…on top of digitalizing the cockpit. This makes ISSC a one-stop shop for turning military planes into semi-autonomous drones. In 2025, revenue jumped 78%. The stock price is now up 86% in the last six months alone.

Advanced Energy Industries (AEIS): AEIS is a $12 billion power supplier that builds rugged power systems for military electronics (for example…radars, sonar, and navigation systems, simulators, data processing etc.). These pieces of military equipment need to operate in harsh environments. Without AEIS’s power products a lot of these pieces of equipment would not be able to function. Revenue is growing rapidly – up 22% in the last year, and the stock price is surging even more – now up 173% in the last year.

BK Technologies (BKTI): BKTI is a small $330 million company that builds tactical radios that soldiers and federal agents use when cell towers don’t exist (or are being blocked by the enemy). This lets soldiers and first responders communicate securely in tough situations. BKTI is estimated to earn ~$100M in revenue in 2026 which is a 12% increase over 2025. The stock is so far up 186% over the last year.

Countries around the world are poised to spend more than $2 trillion on defense in 2026. Owning a handful of small but critical defense industry equipment & service providers is a good way to benefit.

The mainstream media is wrong. Here’s hard proof the American consumer is doing well.

Credit: IGphotography

Don’t buy the doom-and-gloom headlines. To the disappointment of pessimists everywhere, the American consumer is still spending.

The consumer is so strong that many giants of American shopping – Simon Property Group (SPG), Macerich (MAC), Tanger Inc. (SKT), Kimco Realty (KIM), Regency Centers (REG), and Brixmor Property Group (BRX) – reached new one-year highs this week.

Over the past year, I’ve written many pieces on how the bull markets in transportation stocks, steelmaker stocks, automaker stocks, and manufacturing stocks tell us the U.S. economy is doing a heck of a lot better than the pessimists would have you believe.

Many investors obsess over government data such as unemployment figures and the Consumer Price Index. I like to stay on top of that data as everyone else does. However, when I want a read on economic activity, I look at what’s happening in the real world. I look at stock prices. I listen to the judge, jury, and executioner of any thesis, any trend, and any claim: The market.

The stock market is the world’s greatest forecasting mechanism. It tends to look ahead 6 -12 months. When an industry is in a recession, its stock prices will rise before the news media announces it is recovering. When an industry seems to be doing well, its stock prices will decline before the news covers its downturn. This is often called “discounting” or “pricing in” the future.

The market’s ability to “price in” the future is on full display right now. Many of the highest-profile U.S. economic reports from the past few weeks say the economy is humming.

This good news was forecasted months ago by soaring transports, steelmakers, automakers, and manufacturers.

That’s all great, but it’s in the past. So, what’s the market forecasting now?

It’s an outlook that will shock and confound the professional financial pessimists – the ones who believe Donald Trump, debt or deficits, or high P/Es – or “you name it” – will prevent stocks from going up. You know, the guys who have forecasted 40 out of the last 2 bear markets.

I’ve been investing and reading financial research for 28 years. During all that time, I’ve heard many famous pessimists forecast the death of the American consumer. They’ve all been consistently wrong. Not even the dot.com crash or the 2008 financial crisis could knock out the consumer.

This is why I like to say that in the event of global thermonuclear war, two things will survive: cockroaches and the American consumer.

The super resilient American consumer is a friend to all the companies mentioned above.

• With a market cap of $71 billion, Simons Property Group is the largest shopping mall operator in America. It operates over 200 malls across country.
• Macerich is a fellow large shopping mall operator. It focuses on high end shopping centers like Washington D.C.’s famous Tyson’s Corner Center.
• Tanger Inc. is another shopping giant, but with a focus on outlet malls. It’s one of the largest businesses of its kind.
• Kimco, Regency, and Brixmor are giants in the “open air shopping center” business.

Collectively, these six companies operate a huge portion of America’s shopping centers. This means their fortunes rise and fall with the consumer’s capacity and propensity to blow $1,000 at the mall. And their respective stocks reached new one-year highs this week.

The robust health of mall operators is in stark contrast to the media’s constant reporting of struggling consumers. What the media says is the opposite of reality. It’s a shocker, I know.

As an investor, you can base your decisions off bearish stories written by journalists that don’t know much about making money in stocks. You can base your decisions on forecasts issued by professional pessimists who predict nothing but doom and gloom.

Or, you can focus on reality. You can focus on what’s happening in the real world. Right now, reality says shopping mall stocks are at new highs and the consumer is doing just fine.

Market Notes

• Our September 2025 recommendation to get long oil stocks continues its winning ways. Oil giants Canadian Natural Resources (CNQ), Equinor (EQNR), TotalEnergies (TTE), Shell (SHEL), Eni (E), Permian Resources (PR), and Halliburton (HAL) reached new one-year highs today.
• On Monday, I covered the strength in gold stocks and said I expected new highs soon. This week, we got those new highs. The VanEck Gold Miners ETF (GDX) climbed 2.46% on Thursday to reach a new all-time high. Individual leaders Agnico Eagle (AEM), Wheaton Precious Metals (WPM), and Alamos Gold (AGI) reached new one-year highs.
• Our recommendation to invest in critical resources continues to pay off. Shares of the VanEck Rare Earth and Strategic Metals ETF (REMX) reached an all-time high today.
• Our recommendation to own pipeline firms continues to pay off. The Alerian MLP ETF (AMLP) reached a new one-year high today.
• The AI Lawnmower continues to cut down software stocks. Duolingo (DUOL) fell 26% today. It’s down 68% over the last year alone.

Regards,

Brian Hunt
Editor, Money & Megatrends