Let me introduce my Yankee Doodle Dandy portfolio, a compilation of red, white and blue stocks for investors to consider as they celebrate our nation's independence.

Regardless of your views on the Iraq war, there's no denying that defense stocks including Lockheed Martin Corp. (NYSE: LMT), Northrop Grumman Co. (NYSE: NOC), Raytheon Co. (NYSE: RTN) and General Dynamics Corp. (NYSE: GD) are reasonably valued. This is especially noteworthy considering that defense spending will need to be maintained at pretty high levels for years to come in order to replace equipment that's been worn out from combat. President Bush is proposing to spend a record $439 billion in fiscal 2007 on defense and another $42.7 billion on homeland security.

Lockheed, the maker of the F-16, seems especially cheap, trading at a forward multiple of 14.6. Its shares have only gained 4.6% this year even though the company reported better-than-expected first-quarter results and raised earnings guidance. Missile and defense electronics company Raytheon, up less than 3%, is in the same situation.

Investors often overlook the huge businesses that Lockheed and Raytheon have in areas outside of defense, including computer systems and air-traffic control. The managements of both companies also have vastly improved over the past few years. Northrop and General Dynamics have always been pretty well run.

Boeing Co. (NYSE:BA), notably the second-largest defense contractor, also looks worth snapping up. Its stock is up less than 3% this year, which is surprising considering how well it's rebounded against European rival Airbus. The company trades at a forward multiple of 17.7.

Boosted by a net income increase of 47%, the nation's top defense contractor, Lockheed Martin Corp. (NYSE: LMT), is looking for a strong start to the day. Currently, in the premarket, traders have pushed the stock up 3.0% after this morning's release.

Wall Street was looking for the company to come in with $1.24 a share in earnings, but LMT shattered that estimate with a reported $1.46. In addition, full year 2006 estimates are now being lifted to $5.45 to $5.60 a share from $5.10 to $5.30. Consensus estimates on 2006 earnings is currently sitting at $5.29.

The question is how will this carry into the trading day? Net income may have beat expectations, but sales did not. The company was expected to report $9.83 billion in sales, but came in at only $9.61. While this was still a nice 4% jump, we will have to see how the market takes that once the stock is being actively traded on the open market following the opening bell.

Much of the recent jump in income comes from the company being able to make advances in the production of the F-35 fighter plane, their next generation multi military branch combat jet. The company's most popular and well known jet, the F-16 fighter, saw sales fall last quarter. This partly led to the company missing its sales target as the aeronautics division reported a decline in sales of 7%. Luckily for LMT, this drop was counter-balanced by a 10% rise in sales from their systems and information-technology group, which is their largest division.

All in all, a pretty positive release, but how investors will reward the company for beating earnings estimates while missing sales remains to be seen.