The Trump administration has pushed forward increased military spending in the United States that will see the defence budget exceed $700 billion in 2018. This is a significant bump, but there has also been a broad global increase in military spending. Canada has also pledged to increase its military spending from $18.9 billion in 2017 to $32.7 billion by 2026-2027.
The TSX is largely bereft of defence stocks in comparison to the giants available on U.S. indexes, but there are still some solid options. Firan Technology Group Corp. (TSX:FTG) is a Toronto-based supplier of aerospace and defence electronic products and subsystems. Shares of Firan were down 1.09% in early afternoon trading on July 25 and the stock is down 23.5% in 2018 so far.
Firan released its second-quarter results on July 11. The company posted record sales of $28.9 million which represented a 13% increase from the prior year. Its aerospace segment posted 42% growth and the company generated cash flows of $3.6 million compared to $0.4 million in Q2 2017.
The opportunity to buy the May and June dip has passed for some investors, but Firan still comes at a nice value as we look ahead to August.
Investors interested in taking advantage of the ballooning aerospace and defence industry should seriously consider adding Firan for its growth potential. It is one of the few defence stocks on the TSX and comes relatively cheap.
