In November 2013, MRP recommended going Long Aerospace and Defense stocks. A boom in civilian aircraft demand was the core driver of the theme at the time, although rising defense spending outside the U.S. and Europe also played a role.

More recently, the defense side of MRP's theme has taken precedence, as increased geopolitical instability have galvanized countries in Asia, the Middle East, and parts of Europe to boost their defense spending. The election of Donald Trump as President supports a continued aggressive investment investment stance in the defense industry. President-Elect Trump has often stated his goal to increase U.S. defense and military spending from the levels they were before 2013, when budget cuts were enacted. A Republican-controlled House and Senate increases Trump's odds of doing just that. Independent cost estimates for his plan have ranged from $150 billion to as much as $900 billion in additional spending over a period of 10 years. The beneficiaries would be U.S. defense contractors: companies that supply the U.S. military with weaponry and technology. This includes makers of traditional firepower, fighter jets, missiles and tanks, as well as security consultants and IT / Intelligence contractors.

It is too early to tell how commercial aircraft companies in the aerospace sector will fare under the new adminstration. At the moment, we believe the change will be felt more significantly on the defense side. Investors can seek exposure through ETFs like the iShares U.S. Aerospace & Defense ETF: (ITA) which contains some commercial firms but is, overall, more heavily tilted towards defense stocks.

Here's a sample list of U.S. defense contractors:

• Lockheed Martin (LMT)
• Northrop Grumman (NOC)
• Raytheon (RTN)
• General Dynamics (GD)
• Huntington Ingalls Industries (HII)
• Booz Allen Hamilton (BAH)
• CACI International (CACI)

Others*

• Rheinmetall AG (RHMG.DE)
• Elbit Systems (ESL)

*Trump has stressed that U.S. military allies should have to contribute more to their own defense in the future. In the case of NATO, for example, only 5 of the 28 members currently meet the guideline of spending at least 2% of GDP on defense. Germany, an economic powerhouse, spends just 1.2% of its GDP on defense. Overall, the U.S. accounts for roughly 75% of the military spending by all NATO members. If U.S. allies increase their defense spending, that would boost some international defense contractors as well.