August 13, 2007: Aero Defense and Commercial Aviation

Pictures: US Army unmanned weapons systems



Defense stocks look solid in a sea of turmoil. Aero Defense stocks are especially attractive and I have been proud to bring to your attention some nice winners in this sector to you over the past months:

General Dynamics (GD) received a $339m order for 600 Cat II MRAP vehicles, a total of 4400m for M12 SEP tanks and a $120m Stryker order.

Lockheed Martin (LMT) will repay the government $265m for JSF billing errors.

Raytheon (RTN) received a $116m LRASS order.

CRDN received am $800m plus total order for ESAPs.

Northrup Grumman (NOC) and Lockheed Martin (LMT) received a $340m contract for the 3rd NSC (Coast Guard) AND $255m to cover coast overruns on the first two NSCs.

The Boeing 787 maiden flight will be pushed back to October. Most feel that this will have a nil impact on the plane or sales.

Boeing (BA) announced that Spirit AeroSystems has joined the P-8A Poseidon team.

Aviation Daily has reported a large shift in market share from major carriers to low cost airlines.

Stock recommendations:

I like the entire aero defense sector at this time. This is the first time I have recommended the entire sector.

Individual stocks:

BE Aerospace (BEAV)
Goodrich (GR)-- highly recommended
Precision Castparts (PCP)
Spirit AeroSystems ( SPR) --highly recommended
Boeing (BA)
Esterline Technologies (ESL)
DRS Technologies (DRS)
EDO Corporation (EDO)
General Dynamics (GD) -- highly recommended
L-3 Communications (LLL)
Lockheed Martin (LMT)
Northrup Grumman ( NOC)
Raytheon (RTN)


Look for more Homeland Security contracts to the Coast Guard for Deepwater program.
Look for more USAF/Navy and Army unmanned weapons systems to be mass produced by major defense contractors.
Look for bi-partisan support for equipment and supply of the military in the coming months.