February 3, 2007: Aero defense and commercial contract update

U.S Special Forces pictures include night operations with the modified C130 transport, the modified C130 transport loaded with advanced technical gadgets under the hood, and an attack helicopter that is being inserted into night operations.

Armor Holdings (AH) earned $1.02 4Q versus Street's $0.98 estimate.

LLL beat the Street by a penny, $1.37 4Q.

Six vendors were awarded the $12.2B Encore II IT contract from DoD. Booz Allen, CAI, LMT (the big winner here), SAI and SRX.

USAF Special Operations command will be ordering 115 airlifters, with the LMT C130J the leading contender.

NOC and GD received design awards for the DDG-1000.

ESL acquired CMC electronics. Long term positive, short term a modest drain on earnings.

Boeing (BA) is hitting on all cylinders. Higher deliveries of aircraft are anticipated for 2008 than originally announced. Thank you, AIRBUS.

Goodrich (GR) beat the street by ten cents, earning $0.78 4Q.

Upcoming activity to watch:

LOGCAP IV $5B (DCP, LMT, IAP, FLR,etc.)
Project Helix (UK) LMT vrs. LLL $900M
AMF JTRS contract BA vrs, LMT
Joint Cargo aircraft $2.25B LLL vrs. RTN

Readers may want to watch for additional details of the USCG ship building program, Deepwater, in the coming months. Lockheed Martin (LMT) an important player. Democrats may push forward with more coastal monitoring.


Stocks I like are:

BE Aerospace (BEAV)
Goodrich (GR)
Precision Castparts (PCP)
Boeing (BA)
Easterline Group (ESL)
DynCorp Intl. (DCP
General Dynamics (GD)
Lockheed Martin (LMT)

Others are approaching fair value. This is not a sector for a mutual fund or ETF.
Selective stock picking reigns supreme.