investingfromtheright

I am retired and take educated guesses on all things financial.

June 29, 2007

Aero Defense, Agriculture, Pigs and Chickens


Take a seat at my little buffet.


First, Aero Defense:

DCP, KBR and FLR won the Army Logcap IV contracts.

BAE won a $213m order for 287 MRPAs and 154 SOCOM MRAPs.

Military views Seator's Lugar and Voinovich flip flops on Iraq may bode serious trouble for the upcoming 2008 defense bill.Voinovich has already made a fool of himself crying at the John Boulton nomination and his Alzheimer-esque performance on a nationally syndicated radio show this week.Many are viewing some Republicans in the Senate as spineless and not in support of victory in the War of Terror. Of course, they despise almost all leading Democrats much more.

RTN protested the Army JCA award to LLL.

AH won a $50m order from AM General for Humvee armor.

LLL won a two year $700m ID/IQ ceiling increase from SOCOM for JOG.

CP; won a $400m ten year Army contract for GPS receivers.

American Air is accelerating its Boeing 737 deliveries.

China and Bombardier have agreed to partner on the development of the ARJ21-900 regional jet and the CSeries.

CRON acquired EaglePitcher Boron for $70m.



Second, agriculture:

Corn acreage has expanded beyond everyone's expectations. The price of corn has fallen from over $4.00 to $3.23/bushel. Ethanol is marginally helped. he increased corn production could allow an extra 950 million gallons of ethanol to be produced.

Soy production is down, except in Brazil. This helps Bunge (BG), but I think it is already fully priced.

Which leads me to the third point, pigs and chickens:

Analysts have been sour on pig and chicken (poultry) producers because of a forecast of $5.00/bushel corn. This is apparently not going to occur. Thus, I recommend a stock I have studied for a long time, Smithfield Foods (SFD), for consideration to purchase. It has great management, lots of fine brands here and abroad and has been boring me from the low 20s to low 30s when it could be a $50.00 stock by next year when their synergies kick in from acquisitions made the past year.
I do not like any other meat producer at this time.

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