JSA's Whittington said Russia's invasion of Georgia is prompting a rethink (as is a more assertive, far richer China). He sees military cash flowing to larger-scale programs (though Whittington likes Flir too but notes the stock is pricey—shares are up more than 40 percent already this year).
"Mr. Putin took the peace dividend off the table last month. The United States will have to respond," he said. Countering Russian-style adventurism will mean a 50 percent boost to military spending by year four of a McCain presidency. Broadly, that translates to annual contract growth of about 8 percent a year, and profit growth in the 10-14 percent range, JSA estimates.
For mixed defense companies with heavy aerospace and civilian operations, analysts are more concerned with the slowing world economy, which makes mixed defense companies like ITT, Honeywell, Goodrich, and Boeing less attractive. This week, defense giant General Dynamics, maker of the Gulfstream, watched its share price slump on worries the global downturn will hurt aircraft demand. Credit Suisse analyst Robert Spingarn cut his earnings expectations as tight credit and volatile jet fuel prices hinder spending on corporate aircraft budgets. The less said about strike-plagued Boeing the better, as its shares have lost more than a third of their value this year. Earlier this month, Citigroup's George Shapiro called commercial aerospace stocks "value traps" with too-high estimates for this year and next and threatened that the current cycle will "deteriorate faster than in the past."
Mike of WA @ Oct 23, 2008 14:20:45 PM
Michael Kingsley of TX @ Oct 03, 2008 21:33:31 PM
ObamaBidenNOW of ID @ Sep 30, 2008 18:01:12 PM