When it comes to defense spending over the last nine years, there has not been any rest. As I have reported on numerous occasions, the defense sector has beaten the market indices year after year. This year is no exception and two of my recommendations remain ahead of the market and are reporting new contracts every day.
Today, theThe Arizona Republic reports [registration required] that General Dynamics (NYSE: GD) is to receive billions in contracts for its C4 Systems as part of the Army's extensive modernization plan. The company is building a communications network for the Army and is the lead contractor with Lockheed Martin (NYSE: LMT) for a wireless network that will deliver mobile connectivity to soldiers on the field.
General Dynamics is up about $10 (12.5%) in the last year and offers a 1.5% dividend yield. Its current P/E is 16.5 and its P/S is 1.33 with a 15% ROIC. It opened today at $90.58.
The Times of Shreveport, La., writes that Raytheon Company (NYSE: RTN) recently acquired S.I. Government Solutions, a small Florida software company that specializes in protecting government and commercial data. The deal is estimated to be worth $35 million. The acquisition is expected to give Raytheon the ability to sell more services to its DOD clients.
Raytheon is up about $7 (12.7%) over the last twelve months and you can add the 1.8% dividend yield to that. It has a P/E of 15 and a P/S of 1.26 and almost a 19% ROIC. Raytheon opened at $62.78.
Everything these companies make is very high-tech but you will not find them mentioned in that investment category -- that will be the subject of another story.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of GD.
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