Being more positive on aerospace and defense than its colleagues, Citigroup (NYSE:C) said they see Lockheed (NYSE:LMT), General Dynamics (NYSE:GD), Northrop Grumman (NYSE:NOC), Raytheon (NYSE:RTN), Boeing (NYSE:BA), Goodrich (NYSE:GR), Precision Castparts (NYSE:PCP) benefiting from the current spending environment in the sectors.
Citi said, “We think investors are pricing zero to negative growth into defense stocks indefinitely. In a nutshell: The DoD has to spend money to refresh and update equipment.”
The giant bank sees defense moving away from R&D spending and moving spending to the procurement of existing weapon systems. That could boost margins for companies serving the sector, said Citigroup analysts Jason Gursky and Jonathan Raviv.
They also noted that companies could also focus more on selling to foreign and adjacent markets, boosting earnings there as well.
The analysts say stocks in the two sectors are trading at historically low valuations. Measured by earnings over the next 12 months, the companies are trading at 0nly 9 times expectations, below the 10 to 15 times in the past. The 9 times earnings is 35 percent below the broader market.
Top Pentagon Military Officers are also Top Lockheed Martin Salesmen
ReplyDeleteNot sated after sacking the U.S. Treasury, like locusts our Military Industrial Complex is swarming around the globe seeking new sources of sustinance. In the photo linked below we see U.S. Air Force Chief of Staff General Norton Schwartz presenting a model of the C-130J-30 Super Hercules to Indian Defense Minister A.K. Antony at a ceremony at the Air Force Station at Hindon near New Delhi, India on Saturday (5 February 2011) to mark the induction of the first of six Lockheed Martin C-130J airplanes purchased for the Indian Air Force.
U.S. total debt $55.6 trillion, U.S. federal debt $14.1 trillion, U.S. federal deficit $1.5 trillion, U.S. dollar rapidly losing world reserve currency status, as U.S. politicians bought and paid for by multinational corporations (legalized by Citizens United vs. FEC) cut education, close schools, convert asphalt roads to gravel and accelerate America's descent into oblivion so they can pay Lockheed Martin and other greed- and graft-infested government contractors billions for Rube Goldberg defense systems and myriad non-defense boondoggles as unnecessary, unaffordable and unjustifiable as our unending wars for oil and profit. And with the open support of Pentagon top brass, the debt for death and destruction will grow to plague nations around the world:
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