It' s not everyday that investors are presented with a growth opportunity, supplemented by more-than-modest downside protection, but that's the case with General Dynamics.

General Dynamics (NYSE: GD) is a diversified manufacturer of corporate jets and heavy vehicles, and is the second largest military shipbuilder -- specializing in nuclear-class submarines.

Along with consistent earnings and dividend growth, analysts like GD's platform diversity, with civilian work (Gulfstream corporate jets) complementing defense contract work (Trident submarines, armored vehicles). Analysts expect GD's revenue to increase about 10-13% in 2007, and 9-11% in 2008.

Moreover, GD's shares offer a measure of safety in that the submarine portion of the U.S. defense system is the force projection most likely to continue to be funded by Congress. Along with stealth fighters/bombers, submarines are the least-detectable form of military operations.

Long term, analysts generally see growth in GD's sales of business jets, land vehicles and munitions. Cost containment has been adequate. The Reuters F2007/F2008 EPS consensus estimates for GD are $5.07/$5.71.

The qualifiers? A reduction in U.S. Department of Defense appropriations would hurt GD's results, as would a failure to deliver existing work on time.

The First Call mean rating for GD is: Buy. [19 firms.] Mean 2008 target: $99.00. [high: $106, low: $94.]

Stock Analysis: General Dynamics is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from GD's shares. Sell / Stop Loss if you were to purchase shares in this company: $62.

Readers of this space know that the preference is for long-term plays with companies with demonstrated business models (10 years), in an established market, with an average total annual return on equity of 20% during that span. It also helps if the company has a secular tailwind and/or is one of only a few players in a sector.

On the last point, Northrop Grumman Corp. (NYSE: NOC) ranks very high, and it fares reasonably well in the other categories, too.

Northrop is the U.S.'s No. 3 defense contractor and the No. 1 shipbuilder in the world. Analysts like NOC's operational diversity, cash flow, and solid balance, but the company's standout dimensions, from an investment standpoint, are its electronics systems business (21% of revenue) and its ship building business (17% of revenue).

The electronics business is likely to remain a key player in radar/navigation/communications systems, moving forward, and the ships business is also in a preferred position: it's one of only two nuclear-power submarine makers in the U.S. and the only builder of U.S. aircraft carriers. Of course, no one can predict with any certainty the role aircraft carriers will play in defense operations -- the aircraft carrier's demise has been predicted for (seemingly) the past three decades -- but the sense here is that these ships will retain a role in the decades ahead. The company also builds the B-2 stealth bomber and has a 25% stake in the F-35 next-generation, joint-strike fighter.

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.

Look for Textron (NYSE: TXT) to continue to benefit from the global economy's tailwind.

Strong global economic growth should continue to generate solid demand of the company's Cessna jets and planes, which accounted for 51% of its profits. Further, analysts expect Textron's Bell division to perform well in 2008-2009 on strong commercial and military helicopter orders.

Textron's Industrial division should also post solid results, manufacturing everything from golf carts to lawn care machinery to auto parts. A decent, stable dividend adds to the mix. The Reuters F2007/F2008 EPS consensus estimates for TXT are $3.49/$4.09.

Last week when I suggested keepiing an eye on General Dynamics in Chasing Value: French Toast at 35,000 feet: Gulfstream - General Dynamics (GD) I had no idea we would receive an eyeful so soon. However, reports out this morning indicate I was on to something as the Wall Street Journal reported:

• General Dynamics Corp. posted a 25% rise in third-quarter net income, citing robust government defense spending and booming sales of business jets. It also raised its full-year outlook. General Dynamics, which makes Abrams tanks and Stryker troop carriers, two mainstays of U.S. ground forces in Iraq, reported net income of $546 million, or $1.34 a share, compared with $438 million, or $1.08 a share, a year earlier.

General Dyamnics during the quarter improved cash-flow, cash reserves, contracted back-log of work, profit margins and gave a positive outlook to top it all off.

One of the things that makes GD so strong going forward is that the United states war machine keeps finding new frontiers every time you might think that calm is in order. And speaking of orders, investors shoud keep in mind that even if the war in Iraq stopped today and by the wave of a magic wand we could bring the troops and equipment home right now, replenishing our military hardware that has been destroyed, damaged, or just plain worn out will cost billions. General Dynamics and the other defense contractors should do very well even in peace time.