Amid a budget process in which every dollar counts, and while Congress determines the most suitable revenue options for universal health care, legislators have weeded-out one wasteful government program: the F-22 fighter jet program.

The Senate voted 58-40 Tuesday to block expansion of the expensive and controversial new jet, CNN reported, and in the process $1.75 billion will be saved.

Shares of Lockheed Martin Corporation (NYSE: LMT) have moved strongly higher in today's action after the defense contractor put up better than expected numbers for its fourth quarter this morning.

Going into today's earnings release, analysts had been expecting to see the company show $1.92 per share, but the company came in well above those estimates, with a reported $2.05 a share for its quarter ending December 31.

This morning's good news was slightly balanced by the company's announcement that its upcoming full year 2009 profit was probably going to be lower than it had previously forecast, a result of increasing pension expenses. The market was tough on the company's pension plan in 2008, and drove the plan's value down by 28%. The resulting increase in pension expenses forced Lockheed Martin to lower its full year 2009 profit guidance down to between $7.05 and $7.25 from a previous estimate of between $7.65 and $7.90 per share.

"Investors should be well rewarded in the coming years by buying with major U.S. defense companies at current prices," says Gregory Dorsey.

The contributing editor to Stephen Leeb's Income Performance Letter explains, "The U.S. has more than doubled our sales of armaments to foreign nations over the past three years. And regardless of who wins the election, we expect this to continue."

"We're adding one for growth and income to our portfolio now. Lockheed Martin (NYSE: LMT) is a premier defense contractor. It's best known for its fighter jets.

"For example, Lockheed is now developing the F-35, also known as the Joint Strike Fighter, the replacement for the current generation of front-line fighters.

"But the company is actually engaged in four broad business areas, each of which should enjoy strong growth for years to come.

"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.

This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.

"The GOP is traditionally known as the party that spends more on defense; thus, if McCain wins the election, one stock to benefit would be defense firm General Dynamics (NYSE: GD)," says John Reese, editor of Validea, which follows the strategies of "legendary" investors such as Warren Buffett and Peter Lynch.

"While McCain has talked tough about reforming the defense budget, he has also pledged to increase the size of the military, modernize the armed services, and push hard for strong missile defense systems -- all of which require serious spending.

"As a major producer of battle tanks and assault vehicles, armaments and munitions, battleships and nuclear submarines, and military information technology systems, this Virginia-based firm is thus likely to have quite a bit of work on its hands during a McCain presidency.

"Just as importantly, General Dynamics' finances and fundamentals are very strong, earning approval from both my Peter Lynch and Warren Buffett-based Guru Strategies -- computer models that are each based on the approach of a different investing great.

"Because of its moderate 18.14% long-term growth rate and huge annual sales of $28.7 billion, General Dynamics is considered a 'stalwart' by my Lynch strategy, the type of large, steady firm that Lynch found offered protection during downturns or recessions.

"Two big reasons my Lynch model is high on this stalwart: its yield-adjusted P/E/Growth ratio of 0.75, which signals that the stock is a bargain right now, and its 18.79% debt/equity ratio, a sign that GD has the conservative financing Lynch liked to see."

My Buffett-based model, meanwhile, likes General Dynamics' consistency. Over the past decade, its EPS have declined just once, rising from $1.46 to $5.10 in that time.

"The company's annual return on equity -- a figure Buffett used to find firms with the 'durable competitive advantage' he famously prizes -- has been at least 16.4% every year.

"GD has also retained $22.30 in per-share earnings in the past decade while increasing EPS by $3.64, showing it can earn investors a 16.3% return on the earnings it keeps. That's a sign of the strong management Buffett is also known to look for."

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.

"Defense stocks never looked more attractive than they do now," says Jim Powell, who looks at two favorite ways to play the defense sector.

In Global Changes & Opportunities Report, he says, "The drop in defense stocks has more to do with the overall bear market in stocks than to any problems within the sector itself."

"Recent quarterly earnings from many defense companies are up, with signi?cant gains in revenues and earnings.

"Defense stocks have also been pushed down due to worries that the presidential election might go to Senator Obama, who is not expected to be a strong a supporter of the military. Historically, however, Republican and Democratic spending on defense has been about the same.

"Some investors may also be nervous about buying defense stocks if the U.S. is likely to reduce its presence in Iraq over the next few years.

"Partial insulation from the economic slowdown, coupled with new military-aircraft programs, give Lockheed Martin (NYSE: LMT) attractive capital-gains potential over the next several years," says Richard Moroney.

In his blue chip oriented Dow Theory Forecasts, the advisor explains, "A diversified business mix provides investors a measure of safety in a dif?cult economic climate. The stock is a Focus List Buy."

"Lockheed seems well-positioned with regards to the U.S. defense budget, with very little exposure to Iraq. The company is capable of growing pro? ts even if the new U.S. president pulls troops out of the country.

"While defense-spending growth is likely to slow in coming years, ongoing security threats and the need to replace aging equipment should keep the baseline defense budget, which excludes war-related costs, growing through at least 2012.

"A diversified business mix provides investors a measure of safety in a dif?cult economic climate. After the Air Force, Lockheed's next-largest end market is civil government and homeland security, accounting for 26% of revenue.

"The U.S. Navy accounts for 20% of sales and the Army 10%. About 13% of sales are international, and the U.S. communications industry accounts for 3%.

When you watch your kids playing war games on their computers, it must have occurred to you at some point that this might all be part of some grand scheme to get the next generation well-versed in a new set of skills. Hand-to-hand combat (except with their siblings) is out and unmanned aerial vehicles, or UAVs are in.

The AP (7/20) reported that Raytheon Company (NYSE: RTN) recently unveiled "its new control system for unmanned aerial vehicles, or UAVs." Raytheon's "Universal Control System,...uses some hardware from the gaming world," and is expected to "shorten training time and help prevent crashes of expensive unmanned drone aircraft by providing a more interactive experience for the pilot." The company focused on "making the system more intuitive -- replacing keystrokes with a game console -- after consulting with experts and discovering that thumbs are the most energy-efficient and accurate way to control an aircraft."

Given Iran's recent missile tests and all the saber rattling that goes on around the world, it should be no surprise that governments have been seeking Raytheon's Patriot Missile technology for years, but RTN is also a leader in a wide range of radar systems, guidance systems, airport monitoring and control systems, and of course the latest in UAV technology.

BusinessWeek reports that Defense Secretary Robert Gates is expected to make an announcement today about whether the Air Force will reopen the bidding for the $35 billion tanker program. Boeing Inc. (NYSE: BA) thought it had a lock on it but earlier in the year, the Air Force awarded the contract to EADS, parent of Airbus, and Northrop Grumman (NYSE: NOC). Boeing protested and last month, the General Accounting Office (GAO) reported that the award process was flawed.

That should come as no surprise. After all, Senator John McCain (R-AZ) was pushing for the European company to win the competition -- possibly since his then national finance chairman lobbied for that company. One of the sources I spoke with said that people suspect McCain arranged for a change in Tanker specifications to tilt the playing field in favor of EADS. This source also said that the Air Force neglected to notify Boeing of the change. Evidently, the GAO agreed that something was fishy here. It would be at least the fifth time that McCain had been influenced by lobbyists.

Now attention turns to Gates and Congress which hosts a battle between Senators from Washington, where Boeing has operations, and Alabama, where Northrop employs workers. BusinessWeek quotes Senator Patty Murray (D-Wash.), who introduced a Senate resolution on July 8, calling on the Pentagon to rebid the flawed tanker contract, as saying: "The GAO's decision was clear, and today we are reiterating that message so that the Pentagon knows there is no wiggle room. It's time to go back and hold a truly transparent competition that does our war fighters and taxpayers justice."

It was only last week that Goldman Sachs (NYSE: GS) caused havoc in the stock market (or at least lead the charge) downgrading Citigroup Inc.(NYSE: C), and General Motors (NYSE: GM) among others, but now they have started to express concern that some of the defense sector stocks may be vulnerable to the next president's ax.

Bloomberg is reporting that last month Goldman Sachs was issuing warnings to their clients about the fact that Barack Obama and John McCain both may seek to reduce or end big ticket defense purchases such as Lockheed Martin (NYSE: LMT) F-22 fighter and the Army's $159 billion Future Combat Systems, a modernization plan jointly managed by Boeing Co (NYSE: BA) and SAIC Inc.

It was only a few weeks ago I posted Chasing Value: General Dynamics & Raytheon: The defense does not rest and things continued to look bright until a few days later, perhaps after the GS behind the scenes warning started to have an impact on the market that the sector took a mysterious swoon -- now I know why.

If Goldman Sachs, one of the few investment houses with any credibility left, makes a move everyone else seems to want to get out of the way.

I have viewed the defense sector favorably this year and will not abandon ship because GS is getting cold feet. They have been rather negative on everything lately and I do not think the (stock) world is coming to an end.

The Bloomberg article notes that while some programs will be cut others will be added. It is all a guessing game as either presidential candidate will want to review the entirety of defense expenditures in a new administration.

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.

"Flir Systems Inc. (NASDAQ: FLIR) provides thermal-imaging and infrared camera equipment for military, law enforcement, and commercial applications," notes Leo Fasciocco.

In his Ticker Tape Digest, which focuses on stocks showing technical breakouts, he explains, "FLIR has convincingly broken out from a five-week base; the move was boosted by the win of a $359 million contract from the Army."

"FLIR, with annual revenues of $855 million, has been a sensational winner since 2001. It is a beneficiary of the war on terror and the need for equipment to combat it via military and security needs.

"Short-term, the daily chart shows the stock crossing its resistance line at 35.54. The move sends the stock over not only near-term resistance but also over the peak made back in early November. The action indicated very astute institutional buying.

"The recent fits and spasms of the stock market predict tough times ahead; and ironically, that's good news for Raytheon (NYSE: RTN)," says Louis Basenese, Oxford Club Associate Investment Director.

In The Oxford Insight, he notes, "When stocks are anticipating a recession, the best offense is often defense stocks -- and there's plenty of reason to expect this defense contractor to shine, even if a recession is confirmed."

"Defense will likely remain one of the largest budget items for the United States, regardless of which political party wins the fall election. And, according to JP Morgan Securities, the defense outlays of the United States actually increase, by an average of 6.5% during recession years since 1945.

"So in the end, recession or not, as the world's fifth largest defense contractor, Raytheon's sure to enjoy steady demand.

"I'm sure you've recently read, all about the large spy satellite that became disabled and was poised to re-enter earth's atmosphere with a dangerous load of toxic fuel. What few know is that Raytheon's Standard Missile-3 was specially modified to intercept the target 153 miles over the Pacific Ocean.

My fellow Americans...hmm, that's overused....and I am not running for anything. HEY PEOPLE... too rude... To my fellow investors, read carefully: WE ARE NEVER LEAVING IRAQ! There, I said it, it's done.

Don't you wish some of our elected officials could tell it to us straight? We are not going to pull out of Iraq this year, next year, in 10 years or perhaps 100 years. Not unless we are chased out (although some locals are trying). It is true that we may reduce our forces over the next four or five years to a third of what we have there now, but we are not leaving. Since we are not leaving, I would like to see the business plan. Everyone has wanted to see the administration's strategic plan for some time, but a business plan will do.

The United States military never left Korea, Japan, Germany, Italy, and has advisors on every continent, just about every place we have ever gone. The only time we've left is when we were kicked out. The Iraqis will not be kicking us out. They need us to prevent an escalation of the civil war. They need our help rebuilding their infrastructure, (which we bombed), and we want to do that!

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Lockheed Martin (NYSE: LMT), the world's largest military weapons manufacturer, is the favorite conservative stock of Rich Moroney, editor of Dow Theory Forecasts. The advisor notes,"Lockheed generates about 80% of sales to the U.S. government. Lockheed is the prime contractor for the F-35 Joint Strike Fighter, a large and well-funded defense program -- and one of the company's most significant development projects.

"Lockheed has been working to diversify its defense and intelligence work, as well as non-defense government work. Its information-systems and technology-services businesses have been growing nicely, as the government is increasingly outsourcing.

"In August, Lockheed was chosen as the prime contractor for NASA's successor to the space shuttle -- an award with an initial contract value of $4.2 billion.

"At 16 times estimated year-ahead earnings of $5.55 per share, the stock trades at a discount to its five-year average forward P/E of 17 and its peer-group average of 21. Lockheed is a Focus List Buy and a Long-Term Buy."

To see Rich's favorite speculative idea for 2007, click here.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Cogent Inc. (NASDAQ: COGT) is a top speculative idea from Mark Mowrey, editor of the Prudent Speculator TechValue Report. He explains, "Cogent's identification technology emphasizes the uniqueness of the human fingerprint as the best method for identifying its owner.

"Other potentially more reliable technologies exist, such as retinal, facial, voice, and vascular identification, but none has proved as long-term successful in the field as fingerprint matching. Applications include the obvious, like law enforcement and access restriction, and the not so obvious, such as laptop security and fingerprint-based payment systems.

"Revenue peaked in 2005, the bulk coming from two primary customers: the U.S. Department of Homeland Security and the National Electoral Council of Venezuela. Work continues with both agencies, but orders have become less predictable.