Cole KachurIShares Aero & Def. ETFITATOP PICKOct 25, 2018

For defense, you'd want to go to the US. Likes the idea of an ETF, as it spreads out the risk of contracts being awarded. This ETF is the one that makes the most sense.

Sector continues to perform technically -- higher highs and higher lows. 200-day MA is moving higher, long-term weekly averages are strong too. Only concern is that it's really jumped above the bandwidth of gradual growth. Plus, how much will elections affect US defense spending? Politics can change, and then so can the spending.

(You can buy it in USD or CAD, hence the two ETFs. It's the same play.)

He's all about going for easy wins. While he owns some of the underlying names outright, this is an succinct way to own the sector. The Golden Dome will be a major growth driver. With the latest conflicts, everybody's spending on the military -- Canada, Germany, Middle East. Leading companies are citing demand and spending lots. This ETF is cheap, around 27x forward PE, with a lot more to go.

As you look around the world, there's more and more attention on the aerospace and defense area. Chart looks great -- ascending channel of higher highs and higher lows. Bit too narrow a space for him, as it's more industry than sector. Has sold off a bit, with RSI ~42, so you could add at this time. Be cautious as to how much you allocate.

He owns other industrial names.

With an ETF he likes to get the best return with the least risk. Sometimes ETF's work best for this and sometimes individual stocks. There's a wall of money going into defense spending including the US, Canada and Germany. GE and other similar companies are citing demand for defense spending is way up. At 27X it is pricey. If you want to go to the Canadian market you could buy XAD on the TSX.

This holds a lot of GE, Raytheon and Boeing. Likes the defence space. It's timely.

Exposure to some of the biggest names. A lot of defense contractors, performed well with everything going on out there in the world. The only name in there that he's not wild about is BA, it's had trouble. 

ITA has been on the verge of a technical breakout since February with resistance at $116-117. It failed seven times, hasn't moved up. So, he sold it.

Good option for hawkish investors.
Low weighting in portfolio smart idea given nature of ETF.
If conflict persists in Europe - a good option.

Boeing is the second-largest holding in this ETF. Today's announcement won't have a major impact. Use this dip to buy or enter. They just announced production delays.

(A Top Pick September 12/17 Up 25%) He still likes this ETF. It has technically shown another bullish breakout and he is considering re-entering this again soon. Increased foreign spending on security will continue to make this a winner.

ITA-N vs. XAR-N He knows the defence sector. A problem in defence is the huge run-up in Boeing, which dominates defence. ITA has a cap system in place to deal with this over-concentration in a few defence stocks, but XAR is odd because it's equal-weighted, therefore carries more risk. He prefers ITA.

Defence is expensive. This ETF is aerospace and defence. If you want to be more precise, Raytheon (RTN-N) is a good way, which is focused on cyber defence, missile defence, has the most international sales exposure. He likes the theme of defence spending. You take out some of the idiosyncratic risks by buying this one.