By
Rich Smith (TMF Ditty)
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More Articles
June 20, 2011
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Did you know the U.S. is still at war in Afghanistan? It's true. More than a month after we got bin Laden, the U.S. remains heavily engaged in Afghanistan. What's more, with less than one month remaining before -- according to the president -- we begin pulling out of the country, not only are things not winding down, but we're actually buying brand-new equipment to help fight the war.
Case in point: Just yesterday, the Marines awarded a $357 million contract to Navistar (NYSE: NAV ) to build 471 new International MaxxPro Dash all-terrain mine-resistant, ambush-protected (MRAP) vehicles. Once this order is complete, Navistar will have built more than 8,700 MRAPs for the military -- and laid claim to an impressive stream of parts and maintenance revenue on the fleet. Nor does it seem this stream will dry up any time soon. According to Navistar, the company won't even complete deliveries on this latest contract till September 2011 -- two months after the pullout supposedly begins.
What's it mean to investors?
In a nutshell, what this tells us is that any Afghan pullout is likely to be small in scale and slow in its pace. It means companies such as General Dynamics (NYSE: GD ) , Oshkosh (NYSE: OSK ) , and Force Protection (NYSE: FRPT ) , all of which have built sizeable numbers of MRAPs for use in Iraq and Afghanistan, may continue profiting off the servicing of their fleets for months and years to come.
Indeed, as Textron's (NYSE: TXT ) win of a contract to build armored vehicles for the local army demonstrates, these companies could still be profiting from the war in Afghanistan long after it ends … whenever that turns out to be.
Are Navistar and Textron right to gamble on a long war? Add both companies to your Watchlist and find out.
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