Defense Stocks 2026: How the Global Security Boom Creates Long-Term Investment Opportunities

**SPEAKER_1** (0:01)
This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time. Here's your host, Justin Klein.

**Justin Klein** (0:15)
Good afternoon, fellow investors, and welcome back to Invest Talk. This is our Friday, June 5th, 2026 edition of Invest Talk, and what a Friday. It was a lot of movements in markets. Big red day, especially for tech on good jobs numbers. If you've been in the market for a while, you should know what that means. Good job numbers means X, Y, and Z. That's why stocks sold off. It's important to know that. I'll talk about that in my little market recap, but these are examples of how you have to know how to tie these headlines together, where it really matters.
Because we talk about how you don't want to chase the headlines on the show, but it doesn't mean you ignore them because some actually do matter. It's just far fewer than CNBC would like you to believe. So that's our job here is to separate the wheat from the chaff. Make sure that you are focusing on the right data points so that you can make better decisions with your money. Decisions that are data points that will actually mean something to your portfolio, to the broader economy, to policy decisions in Washington and beyond, etc.
So that's what the show is really about, helping you navigate this very interesting time that we are living in. Now, I'm Justin Klein and our objective here each weekday on Invest Talk is to help you become a better investor. And we do that by mainly answering your finance and investment questions and bringing topics to the table so that you have more insight, more perspective, once again, beyond just the headlines. So that's what this show is. And heads up, our next Wealth Webinar is coming up on Tuesday, June 30th from 12 to 1 p.m. Pacific Time, the title is Beyond the Yield, How to Invest for Your Income Needs.
So make sure you head over to investalk.com and register. But we're here now, we're ready for your calls at 888-989-CHARP. So whatever's on your mind, don't hesitate to reach out. Now in just a bit, we'll talk about today's Mark Performance and run down the show topics for the hour. But as usual, we'll tackle this first caller question now.

**SPEAKER_3** (2:40)
Hi, Justin, Luke, great show. First of all, I want you guys to look at this talk for me. It's a Lincoln Financial, the ticker is LNC and just tell me your opinion. I would appreciate it. Thanks again for everything you guys do and a great show. Thank you.

**Justin Klein** (2:53)
Looking at Lincoln National Corp, provides life insurance, group protection, annuities, private planning, investment services, etc. What I worry about all these insurance companies, how much private equity exposure they have. Usually a big tell is just how they've done over the past, really since the beginning of the year. That's when private equity peaked. You go look at the PSP, it's a good proxy for that. That peaked really back in the fall, rallied into the beginning of the year and then rolled over in earnest.
The fact that LNC has fallen along with it, gives me a bit of pause. It's also a small cap name, $6.6 billion market cap. Remember these insurance companies, they take the premiums and they invest them.
Many have chased fixed income.
Many have poorly allocated capital within the space. When you're seeing this relative strength at $37 billion, which is not horrible, but certainly not good, it's telling you a lot about what the market thinks underneath the hood. You're probably going to look at this and you're going to say, well, it looks cheap, so it's $7.67 this year, $8.34 next year, and it's only a $34 stock. 34 and change. So yeah, forward-looking earnings, multiple is only about four times. Once again, looks cheap. But this is where you always have to dig deeper. What's cash flow? Pre-cash flow is only 243 million. For these financial firms, it's very easy to, I don't want to say cook the books, but manipulate the earnings numbers to make it look better than it actually is. So for service, you'll say four or five PE. The payout ratio is 20 percent with a dividend yield of 5 percent. But when I see that, that should be a red flag to all of you. When something is that cheap, you have to ask one thing. The first thing is, what's going on with the balance sheet?
Is the balance sheet stretched or not?
What's the strength of those underlying assets as well?
They have about six billion dollars in net debt in their balance sheet.