Defense Stocks Will Explode if This Iran Situation Escalates

Apprehension continues to build on Wall Street as investors await to see if war is on the table for Iran and the U.S. Both U.S. leaders and Iranian leaders have reassured that they are not seeking war, but tightened sanctions and the heated situation in Iran has led to Iranians worrying about a potential war.

According to Nima Abdollahzade, a legal consultant at an Iranian startup company who spoke to Reuters, the prospect of war was now the main topic of conversation in workplaces, taxis and buses. “Apart from the deterioration in the Iranian economy, I believe the most severe effect” of confrontation with the United States “is in the mental situation of ordinary Iranians. They are sustaining a significant amount of stress,” said Abdollahzade.

Washington has extended its sanctions to ban all countries from importing Iranian oil and it was a year ago that the U.S. withdrew from an agreement between Iran and world powers that limited Iran’s nuclear program. This was in return for lifting economic sanctions. Trump has recently tweeted: “If Iran wants to fight, that will be the official end of Iran.”

Foad Izadi, a political science professor at Tehran University, told Reuters, “Iranian officials have come to this conclusion that Trump does not seek negotiations. He would like a phone call with Rouhani, even a meeting and a photo session, but that’s not a real negotiation.”

Supreme Leader Ayatollah Ali Khamenei, Iran’s highest authority, said that it is not in the U.S’s interests to attack. The prospect of war is an unfortunate thing, but for Wall Street, it means that defense stocks may see gains on the horizon.

The demand for military and defense related products and services may soon see a boost as investors keep a close eye on the Iran situation. Stocks that may see movement include:

Northrop Grumman (NYSE: NOC), a leading global security company providing innovative systems, products and solutions to government and commercial customers.

Raytheon Company (NYSE: RTN), a major U.S. defense contractor and industrial corporation with core manufacturing concentrations in weapons and military and commercial electronics.

General Dynamics (NYSE: GD), a global aerospace and defense company. The Aerospace segment designs, manufactures and supports business-jet aircraft, primarily under the Gulfstream brand. The Combat Systems segment designs, develops and manufactures combat vehicles, weapons systems and munitions.