GEO Investing

Why Trump’s Initiatives to Take Control of Our Borders Can Transform Your Portfolio

Those shrugging off Trump’s long standing position to “Build the Wall” may soon find themselves late to the party.  If you hadn’t noticed, his narrative to regulate immigration has been arguably the most touted platform on which he built his presidential campaign. There are several angles you can take to get exposure to border security, but you only have to take a quick look at researching potential ideas to realize that breaking it down is not so easy.

Without doing too much digging, you could bank on a midcap name garnering some of the spotlight when it comes to border security. Griffon Corporation  (NYSE:GFF) is a diversified company spanning several segments — Home & Building Products, Telephonics and Clopay Plastic Products.  The company has been able to successfully disperse its business across these three segments such that the consolidated revenue attributable to each of the segments is in nearly equal parts. Based on long-established relationships supported by existing contractual arrangements, the Telephonics segment is a first-tier supplier to prime contractors in the defense industry such as Lockheed Martin Corporation (NYSE:LMT), Boeing Company (NYSE:BA), and Northrop Grumman (NYSE:NOC), as evidenced by the almost daily awarding of contracts to each of these companies.

Investors who wanted to take a double-pronged approach to the Trump victory quickly figured out that both the Home and Telephonics segments could translate into immediate returns in the aftermath of the Presidential election. Housing, because of the fear that a new administration would increase interest rates and more notably, telephonics, because of the implications that over the next four years – government spending for securing the US borders will balloon.  As referenced in the company’s latest 10-K, GFF’s focus on border surveillance and infrastructure is holding steadfast:

“Telephonics continues to direct resources towards border surveillance and critical infrastructure security initiatives. These opportunities represent strategic advances for Telephonics by enabling it to expand its core technical expertise into the nascent and growing border and perimeter security markets, both in the U.S. and abroad. With many of these programs, system specifications and operational and test requirements are challenging, exacerbated by demanding delivery schedules. Telephonics believes that the technological capabilities that these systems encompass will also be able to serve and protect the most complex borders.”

While many investors think this was a “gimme”, did you have GFF in your portfolio?  If you did, you would have ridden a wave with a company that saw its market cap go from $750 million pre-election to its current market cap of $1.1 billion — a near 50% gain!

Now the trick is to find companies that have not moved and can similarly perform purely based on either direct or ancillary involvement with Homeland Security.

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