Defense Stocks . . .

W

waggie945

Today, Smith Barney defense stock analyst George Shapiro downgraded from BUY to HOLD many of the stocks in the sector due to his having conducted a "Public Poll" on the public's support of continued defense spending.

Seems like we might be a couple of days away from a nice "oversold" buying opportunity in this group, especially if the "growth" stocks take a hit and funds rotate back into "value" names like NOC, LMT, LLL, GD, etc.
 
Amex Defense Index - DFI Sep. 23, 2003 2:05 PM ET

Index Value Net Change % Change
591.37 - 13.58 2.24


Company Name Symbol % Weighting

Flir Systems FLIR 6.79%
Stewart & Stevenson SVC 6.74%
Edo Corp EDO 6.74%
Engineered Support Sys EASI 6.73%
Titan Corp TTN 6.72%
Alliant Techsystems ATK 6.68%
Raytheon Co RTN 6.65%
United Industrial UIC 6.65%
Genl Dynamics GD 6.65%
L-3 Communications Hldgs LLL 6.65%
Drs Technologies DRS 6.62%
Lockheed Martin LMT 6.61%
Northrop Grumman NOC 6.60%
Rockwell Collins COL 6.60%
Boeing Co BA 6.57%
 
this time from junior analyst Heidi Wood of Morgan Stanley and Nick Fothergill of Banc America Securities.

Looks like it's time to get IN!!!

:)
 
Quote from waggie945:

Today, Smith Barney defense stock analyst George Shapiro downgraded from BUY to HOLD many of the stocks in the sector due to his having conducted a "Public Poll" on the public's support of continued defense spending.

Seems like we might be a couple of days away from a nice "oversold" buying opportunity in this group, especially if the "growth" stocks take a hit and funds rotate back into "value" names like NOC, LMT, LLL, GD, etc.
More...


As I swing trade good stocks that have been trashed, I've been sorely tempted with the defense stocks. However....if you look at a long term (weekly or monthly) chart going back a few years, you will see that they have the potential for undergoing severe and protracted corrections when the spending stops. It is probably for that reason that S&P has issued a caution on buying them, and their price targets are far below current price. Their logic is that Bush has blown out his spending in Iraq, and there will be little left in the kitty going forward. Probably not much left for any of us, either!

But having said that...if we are attacked again I would be in there buying immediately.
 
The fear by defense analysts right now is that there will be cuts in the PROCUREMENT portion of the defense budget. Yet, I think that this is not a reality, especially in the type of atmosphere that we are currently in.

Moreover, should GDP continue to grow at 4% then defense spending as a PERCENTAGE of GDP can actually INCREASE, even with a decline in the "procurement" portion of the DoD budget.

Just my 2 cents.

:p
 
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