Despite U.S. economic slowdown, L-3 keeps rolling along

For L-3 Communications, the defense never rests. L-3 Communications Holdings, Inc. (NYSE: LLL) makes secure and specialized systems for satellite, avionics, and marine communications, with a healthy percentage of its business coming from the U.S. Government.

Analysts like LLL's diversified revenue stream: specialized products (34%), intelligence/communications (22%), government services (25%), and aircraft modernization and maintenance (19%).

Analysts expect 8%-9% organic revenue growth in 2007 and 7%-8% in 2008, including solid growth in government service and specialized products. The Reuters F2007/F2008 EPS consensus estimates for LLL are $5.95 to $6.51.

The risks? Analysts are keeping their eye on LLL's profit margins, high financial leverage, and ability to increase its low dividend. A substantial decline in U.S. government/defense spending would also hurt L-3's results.

The First Call mean rating for LLL is: Hold [15 firms]. Mean 2008 target: $116.20 [high: $129, low: $108].

Stock Analysis: L-3 Communications is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from LLL's shares. Sell/Stop Loss if you were to purchase shares in this company: $78.