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Corporate profits sunk 11.5% during the fourth quarter, illustrating just how much companies rely on share buybacks and other tactics to boost their stock prices, according to one analyst.

"There has been this extreme focus on financial engineering -- specifically buybacks," said David Nelson, chief strategist at Belpointe Asset Management, based in Greenwich, Conn. "That's wonderful to prop up the bottom line, but it comes at a cost -- you're really selling the future of the company to prop up those near-term earnings and revenue."

First-quarter earnings are expected to fall 8.7% year over year and 78% of S&P 500 companies have released negative EPS  guidance, eclipsing the five-year mean of 73%, according to FactSet.

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Meanwhile, amid the rise in terror attacks over the past six months, Nelson is focusing on the defense sector, particularly companies including Lockheed Martin (LMT) - Get Lockheed Martin Corporation Report and Northrop Grumman (NOC) - Get Northrop Grumman Corporation Report .

"Almost all of the [presidential] candidates support increased military spending," Nelson said.

While Lockheed Martin is on the top of Nelson's list, he's also fond of Boeing (BA) - Get The Boeing Company Report . "They're a big defense contractor as well," he said.

Lockheed Martin is a holding of Jim Cramer's charitable trust, Action Alerts PLUS. The S&P Aerospace & Defense Select Industry Index rose 4.4% over the past month.

As for the broader markets, last week, stocks snapped five straight weeks of gains. The fate of the S&P 500 in terms of whether it can stay above 2,000, lies in the hands of oil. "This rally started with oil and it will end with oil," he said. "If oil goes down to the lows, it will drag stocks right along with it," as stocks and oil are still moving in a lockstep pattern.