Filed under: Competitive strategy, Chasing Value, Stocks to Buy, General Dynamics Corp (GD), Raytheon Company (RTN), Best Stocks for 2008
In recent months I have been recommending that investors take a look at the defense sector as a safe haven during this erratic stock market — erratic and down. My most recent post on the subject was Chasing Value: Raytheon (RTN) up on earnings & 2008 outlook. The defense sector has beaten the S&P 500 index for eight years running and this year may mark the ninth straight.
In a previous post I trumpeted General Dynamics Corporation (NYSE: GD) and still believe in the stock. The price-to-sales is a modest 1.33. The P/E of 16 and dividend are average, but it has a healthy ROE near 20%. If you believe the forward looking P/E it is only 14. GD makes the Gulfstream aircraft for the wealthy jet-setter and the Abrams tank for the military. How many of those will need parts or replacement in the coming years?
When I was evaluating my 2008 picks I looked at most of the large defense contractors and included RTN over GD. If you look at the chart below and the original story Chasing Value: General Dynamics (GD) looking long and flying high!, you will find I was looking at General Dynamics around $90 a share. We bought in at $88 so you know I like it even more in the area of $83 where it is trading now.
Continue reading Chasing Value: General Dynamics (GD) revisited
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