Over the years it has become abundantly clear that defense spending is going to rise every year and hence, defense stocks have naturally emerged as some of the safest investments in the market. However, the current unstable geopolitical situation in different corners of the world could lead to even more defense spending, if a Bank of America analyst is to be believed.

Ronald Epstein of Bank of America stated that in 2020, defense companies could generate revenue growth in the high single digits. Hence, it is worthwhile to have a look at these 3 penny stocks that could prove to be good investments.

Liberty Defense Holdings (SCAN.V) (LDDFF)

There have been more mass shootings this year in the United States than there have been days in the year. Over 330 mass shootings [1], to be exact. This is becoming a huge issue that is costing precious lives and could see billions of dollars spent to fix this situation.

Liberty Defense (TSX: SCAN.V) (OTC: LDDFF) plans to address this issue using HEXWAVE, a next-generation high-tech security scanning system. It will use advanced, low-power radar, 3D-imaging, and Artificial Intelligence (AI) to screen people at public gatherings such as sports games, unobtrusively. The company itself has been making paramount progress this quarter.

Most recently the company signed a collaboration agreement with Port Tampa Bay to beta test HEXWAVE. Between the years 2007 and 2017, total cruise ship passenger capacity grew by 25 percent in North America, with the following 10 years estimated to see a further 41 percent increase, according to a 2017 report. So this move could prove to be well-timed for a company like Liberty Defense (TSX: SCAN.V) (OTC: LDDFF).

Also, keep in mind that they’ve also got agreements in place with FC Bayern Munich’s Allianz Arena in Germany, Rogers Arena in Vancouver, British Columbia, Maryland Stadium Authority’s Camden Yards Complex, and in the state of Utah. There’s also projects with the Virginia Division of Capitol Police, in Sleiman shopping centers, in a Hindu temple, in the Metro Toronto Convention Centre, in Toronto Pearson International Airport, and with the University of Wisconsin Police Department. To say that they’ve laid the groundwork may be an understatement and results of these beta tests are highly anticipated by the company.

RADA Electronic (RADA)

One of the defense stocks that has been on fire since as far back in August is that of RADA Electronic Ind. Ltd. (NASDAQ:RADA). Since the early days of August, the stock has gained consistently and currently, it gains stand at 58% till date. It goes without saying that it is a handsome return and the reason behind the rise lies in the new contracts that the company has managed to sign.

On October 10, the company revealed that it had received order worth as much as $6 million for both August and September. More importantly, RADA has managed to rake in as much as $41 million worth of order this year so far and has emerged as one of the stocks to watch.

Kratos Defense & Security (KTOS)

The other defense stock to watch closely is that of Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), which released its financial results for the third quarter on Wednesday this week. The company managed to deliver a highly impressive performance as it grew its revenues year on year and also managed to beat analysts’ estimates for earnings.

Kratos managed to deliver earnings of 9 cents per share, which is higher than the analysts’ estimates of 7 cents a share. It is a significant development and has made Kratos one of the defense stocks to be in focus this week.

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