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Another Defense Contractor With Strong Momentum

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In yesterday's edition of StreetAuthority Daily , I made the case that investors should look to increased military spending by the new Trump administration and Republican-controlled congress as a strong catalyst for investing in the sector.

The pick I shared in that article was a company that's responsible for the construction of the bulk of the current U.S. Navy fleet. And since the Navy itself has said it will need at least 82 new vessels to maintain operational capacity, it is very likely that this company will continue to benefit.

Another way to indirectly benefit from increased military spending in general is with a recent pick made by my colleague Jimmy Butts, Chief Investment Strategist of Maximum Profit .

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For those who are unfamiliar, Jimmy's system uses two important momentum-based indicators to deliver "buy" signals on stocks when they are entering a period of rapid growth, and "sell" signals for when it's time to book profits and move on.

Since the inaugural issue of Maximum Profit , it's quickly become StreetAuthority's best-performing investment system. And in my eyes, there's nothing that has been able to deliver so many consistent winners in a variety of market conditions. That's helping subscribers enjoy some phenomenal gains.

That's why I found it interesting when his system recently identified another government contractor -- Booz Allen Hamilton (NYSE: BAH ) -- as a "buy."

Booze Allen is a leading provider of management and consulting services to the U.S. government, international governments, and major corporations. The company's expertise is in engineering and science, military, systems delivery, cyber, and analytics.

Here's what Jimmy had to say about the company to his readers:

For more than 100 years this company has been assisting the government in everything from fighting global terrorism to combating cyber attacks to improving efficiencies.

For fiscal 2016 ended in March, the company brought in more than $5.4 billion in revenue and turned that into a $237 million profit. But where the untapped potential really lies is in the company's backlog.

In its most recent quarter, the three months ended in September, Booz Allen increased its backlog 13.5% over the prior quarter to more than $13.6 billion. Remember, backlog is contracts in the pipeline that haven't yet been realized as revenue. While it's not certain that all of its backlog will be recognized as future revenue, it is a good indication that the company is winning contracts. And we can assume with some certainty that if the company's backlog is growing, future revenue should grow along with it.

Not to mention the fact that the Trump administration has stated that it intends to increase military and defense spending, which could be a major boon for Booz Allen.

Government contract companies such as Booz Allen have largely been overshadowed recently by the financial and infrastructure industries, but it's a sector that will likely see solid growth and soar higher as investors continue to jump aboard.

Government contracts can be a lucrative business, especially with an administration that intends to increase the military and defense budget. The company's strong backlog also suggests that earnings may move higher over the next couple of quarters. These tailwinds are likely to benefit Booz Allen going forward.

Wall Street analysts are currently divided over this stock's expected performance. Recent price volatility and uncertainty surrounding President Trump's ability to follow through on his military spending promises continue to make investors uneasy. However, the consensus price target near $38 per share suggests that more growth is likely on the way.

At the same time, our market-proven indicator has provided us with a more decisive recommendation. And given the reliability of the Maximum Profit system, the fact that this stock has been flagged as a "buy" means it should merit strong consideration for your portfolio.

If you're interested at all in this simple yet incredibly successful system work for the rest of your portfolio, then you should check out our full report on Jimmy's Maximum Profit system. Using proven momentum-based indicators, Jimmy and his subscribers have made gains of 82% in 48 days… 118% in 86 days… 266% in 12 months -- and more. You can go here to learn more .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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