"As my high school football coach always quipped, 'Offense may win fans, but defense wins games,'" says leading growth stock expert Louis Basenese.
Here, the Oxford Club associate investment director takes a look at his three favorite defense stocks, noting, "When it comes to investing in the current environment, I'm convinced that you can't go wrong with this trio of companies."
"In my view, this sector willl never fall out of favor. The recent development with Russia serves to underscore another point I've been making for years. We always have to be prepared.
"Or, put another way, there will never be a good time for defense cuts, lest we want to leave our country vulnerable.Add it all up, and we can expect defense companies to enjoy steady demand. Even in the face of a recession.
"As the CEO of Rockwell notes, there has been absolutely no fallout in the defense industry as a result of the worldwide credit meltdown or other economic woes. So here's a quick run-down on the three defense companies we prefer for investors.
"Lockheed Martin (NYSE: LMT): As the world's largest defense contractor, it boasts economies of scale unmatched by any competitors and the biggest backlog in the business at $74.5 billion.
"Plus, it beat earnings expectations in the most recent quarter and raised full-year guidance for the second time, a strong predictor of future share price appreciation.
"Raytheon (NYSE: RTN): The company's program-agnostic business model makes it the least risky defense contractor, as no project accounts for more than 4% of revenues.
"Raytheon also boasts a hefty $37.5 billion backlog. And like Lockheed, it posted strong results in the most recent quarter (earnings from continuing operations were up 21%) and upped full-year guidance.
"L-3 Communications (NYSE: LLL): The company is one of the fastest-growing defense contractors. In roughly a decade, it expanded revenues from $1 billion to over $14.4 billion.
"The company operates in the sweet spot of the defense industry, providing 'high-value' intelligence, surveillance and reconnaissance services. And just like Raytheon and Lockheed, it recently beat expectations and raised guidance.
"Not to be overlooked either is the recent performance. Each stock is in positive territory, compared to double-digit declines for the market (as represented by the S&P 500).
"In the end, if the goal is to 'never lose money,' these three defense stocks should help us do one better. These three stocks will do more than just preserve your capital. So keep buying."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
10-27-2008 @ 10:52AM
Chris said...
I agree. A good defense is a great offense, in sports and in the market. While I do think that almost every stock will follow the overall market direction, we need to look at a little bit of history. After the Great Depression (which some think we are headed for) there was a War which would ONLY be good for defensive stocks, no one else. I think this a great play, another site I really like is one that has great education and impressive returns. They play DEFENSIVE stocks as well
http://tradewithpros.com/
10-27-2008 @ 10:57AM
Brandon said...
We are going to need defensive companies soon. With the elections coming up and all the turmoil overseas there could be serious conflict in our near future. I read an article that shows how the middle east is making moves right now. Its very interesting. Here is the article http://www.gotoguy.com/?p=469 .