Worried About a ‘Trumpcession’? Buy These 3 European Stocks to Protect Your Portfolio Now.

Wall Street has traditionally viewed Donald Trump’s presidency as good for the economy and the stock market. Although Trump campaigned on both tariffs and austerity measures, many investors didn’t expect both to materialize so rapidly through executive orders. Trump continues to esclate a tariffs-driven trade war and support federal spending cuts that have eroded market sentiment. 

Fears of a “Trumpcession” have now rattled markets, and investors have started scrambling to find equities to hedge against growing U.S. instability. The Republican administration has signaled they are okay with taking on some pain to change how the U.S. government gets its revenue. Cutting up to a trillion dollars in spending and levying tariffs on trading partners to balance the budget is unlikely to be a smooth ride. GDP is expected to contract by 2.4% in the first quarter, according to the Atlanta Fed, and UMich expects inflation to be nearly 5% a year from now, mainly due to tariffs.

Shifting some money into European stocks can now be a good idea to hedge against all that risk. Here are three to look into:

European Stock #1: Rheinmetall (RNMBY)

Rheinmetall (RNMBY) is a European defense contractor based in Germany. It has now gone parabolic as Trump’s policies prompt a shake-up in Europe’s defense structure.

Europe is expected to take on a more aggressive role in defense under Trump, and Trump has been pressuring European countries to increase their defense budgets significantly. With the Russia-Ukraine war ongoing, countries are rapidly increasing their defense budgets. With Trump threatening to cut support to Ukraine and pull out of NATO, the pace of rearmament is accelerating.

Earnings are estimated to increase by 113% this fiscal year and 52.44% in the next fiscal year. The stock has gained 2,529% in the past 5 years, and investors still see more upside potential due to surging defense spending in Europe.

All eight analysts covering RMNBY tag it as a “Strong Buy.”

European Stock #2: Saab (SAABY)

Saab (SAABY) is a Swedish aerospace company. It is capitalizing on Nordic and Baltic security fears and is also gaining after both Finland and Sweden joined NATO. It has seen its backlog swell to 187 billion SEK, with organic sales growth of 29% in Q4.

The trends will likely accelerate since the company has AI-integrated Gripen E fighter jets that make it a top pick for European countries trying to distance themselves from the U.S. Countries including Canada, Portugal, and Switzerland have been reconsidering their F-35 purchases. 

SAABY stock has gained 78% in just the past month alone. Revenue is expected to grow at almost 25% this year to $7.27 billion and double by 2030. Saab will likely outperform these expectations if European countries keep increasing their defense budgets.

There are no analysts in coverage as tracked by Barchart.com. 

European Stock #3: Leonardo S P A (FINMY)

Leonardo (FINMY) is an Italian defense contractor. It also has a U.S. subsidiary called Leonardo DRS (DRS). It covers everything that is in high demand in the defense sector: aircraft, helicopters, radar, electronic warfare systems, space tech, cybersecurity, and even UAVs for land, air, and naval use.

It reported surging orders and backlog, with new orders increasing to 20.9 billion EUR, up 12.2% compared to pro-forma results for 2023. Revenue increased by 16.2%, and the order backlog increased to 44 billion EUR in 2024.

FINMY has climbed 133% in just a 6-month period and is up 982.92% in a 5-year period. The stock could surge more as it gets more orders with soaring defense budgets. It now expects 21 billion EUR in new orders this year and 18.6 billion EUR in revenue. It sees cumulative orders rising to 118 billion EUR over the 2025-2029 period.

Four out of five analysts in coverage tag it a “Strong Buy.”