Goldman Sachs on Monday told clients to buy two aerospace and defense companies that could emerge as the biggest beneficiaries of increased military spending by the Trump administration.
"Our political economist, Alec Phillips, expects defense spending will rise starting in October 2017 when FY 2018 [fiscal year] appropriations begin. However, it is possible (but not our expectation) that Congress will boost government spending on defense for the remainder of the current fiscal year (May to September)," Goldman Sachs' chief U.S. equity strategist David Kostin wrote in a research note.
Since the election, the aerospace and defense industry has outperformed the market, up 9 percent compared with a gain of 7 percent for the S&P 500 index.
That outperformance will continue in the months ahead even after protectionist policies proposed by President Donald Trump cause some market volatility, Goldman said.