Defense sector

Screening Filters

1. Market Cap ≥ $10B

   • Purpose: Focus on large, established defense contractors.
   • Rationale: If the U.S. were to put soldiers on the ground in Iran, the bulk of incremental defense spending would likely flow to major primes and large subsystem suppliers (think missiles, aircraft, communications, logistics). These firms:
     • Already have big contracts with the DoD
     • Have the capacity to scale production quickly
     • Are more likely to be central beneficiaries of a large conflict-driven spending wave
       Smaller firms may move more in percentage terms, but they are less certain beneficiaries and more idiosyncratic.

2. PriceAboveMA200 (Price above 200-day moving average)

   • Purpose: Select stocks in a confirmed longer‑term uptrend.
   • Rationale: You’re asking for “best stocks” in a specific geopolitical shock scenario. Using the 200‑day moving average:
     • Filters out structurally weak or downtrending names that might not respond well even if news is favorable
     • Emphasizes stocks already being accumulated by institutions and with strong relative performance
       In a crisis, capital typically flows to the strongest names in the favored sector, not the laggards.

3. Industry = Aerospace & Defense

   • Purpose: Directly target defense-related businesses.
   • Rationale: Boots on the ground in Iran would likely increase demand for:
     • Weapons systems, missiles, munitions
     • Aircraft, drones, communication systems
     • Defense IT, C4ISR, logistics and support
       Restricting to Aerospace & Defense aligns the universe directly with companies most levered to higher U.S. defense spending and operational tempo.

4. Exchange = XNYS, XNAS, XASE (NYSE, NASDAQ, AMEX)

   • Purpose: Limit to major U.S.-listed, liquid stocks.
   • Rationale:
     • Ensures the results are mostly large, widely traded U.S. names that a typical investor can easily buy and sell with tight spreads.
     • Excludes OTC or very illiquid listings that may be harder or riskier to trade, especially during geopolitical stress when liquidity matters.

5. Net Margin ≥ 8%

   • Purpose: Ensure financial strength and profitability.
   • Rationale: In a war‑driven demand spike, you want companies that can:
     • Translate higher revenue into meaningful profit growth
     • Absorb cost pressures and execution risks
       A minimum 8% net margin screens out marginal or structurally weak players that might win revenue but not generate solid earnings (or could be squeezed by cost overruns or contract issues).

6. P/E (TTM) between 10 and 30

   • Purpose: Keep valuations within a “reasonable” band.
   • Rationale:
     • P/E < 10 can signal deep value but also serious structural or earnings risk; those may not react as cleanly to geopolitical catalysts.
     • P/E > 30 helps avoid overly speculative or already “priced for perfection” names, where even positive news might not lead to much upside.
       The 10–30 range aims for companies where:
     • Valuation isn’t so low it suggests major hidden problems
     • Nor so high that most of the conflict-related upside is already priced in.

Why Results Match

• The industry and exchange filters ensure you get U.S.-listed Aerospace & Defense names, directly aligned with increased Pentagon spending from a ground conflict.
• The market cap and margin filters target large, profitable contractors that are most likely to win big incremental contracts and convert them into earnings.
• The P/E range keeps you in reasonably valued stocks where additional demand can still translate into share price upside.
• The PriceAboveMA200 filter focuses on technically strong leaders in the space—names that the market is already favoring and that are more likely to outperform if defense spending expectations spike.