My Foolish colleague Anand Chokkavelu wrote about "8 Aerospace and Defense Stocks Near 52-Week Lows" a few months ago. These stocks are still within 25% of their 52-week lows, making them affordable. They all, aside from Spirit AeroSystems, pay dividends at various levels, making them a great addition to any portfolio.
It would be easy to simply pick the top three companies based on dividend yield, and you would do all right picking the top three on this list. But numbers tell only one part of the story. Numbers help provide objective information on the value in a company. My personal experience with some of these companies on a recent deployment to Iraq helped me make my choices here.
|
Company |
Recent Price |
P/E Ratio |
Dividend Yield |
|---|---|---|---|
|
Lockheed Martin |
$74.27 | 9.8 | 5.4% |
|
Raytheon |
$40.57 | 7.6 | 4.2% |
|
Northrop Grumman |
$53.49 | 8.4 | 3.7% |
|
Boeing |
$62.78 | 13.3 | 2.7% |
|
L-3 Communications |
$63.72 | 7.4 | 2.8% |
|
Rockwell Collins |
$53.25 | 13.8 | 1.8% |
|
Alliant Techsystems |
$55.57 | 6.0 | 1.4% |
Source: FinViz.com.
Dedicated to their jobs
When I was deployed to Iraq last year, our unit worked with various government contractors from many of the companies mentioned here, but those who worked for L-3 Communications were the most dedicated to performing their jobs. While many other contractors were working 9-to-5, five-day-a-week schedules in a 24/7 environment, the L-3 contractors working with our unit went above and beyond, putting in as many hours as their uniformed counterparts did. That earned them, and the company they worked for, my respect, which is why their company is one of my choices here.
Add L-3 Communications to My Watchlist, or find out whether it's the perfect stock.
Cheap and yielding
One of the cheaper stocks on this list is Raytheon, which has the second-lowest P/E ratio of those mentioned here. It produces numerous items, but it's probably best known for its radar systems and missiles. It developed a land-based version of Northrup Grumman's Phalanx system, which is used to shoot down incoming mortars. These systems earned my appreciation by protecting us from mortars while in Iraq, as well as providing us with a fireworks show every once in a while.
Add Raytheon to My Watchlist, and try not to get too worked up over its recent earnings.
Transporting the troops
My final choice is the also the top-yielding stock on this list, but I'm picking it for reasons beyond that. Lockheed Martin's MC-130H Combat Talon II is the plane of choice for the group of troops I supported while in Iraq, and I flew around Iraq in the belly of these fine planes. Members of the Air Force flew the planes, but Lockheed developed a great aircraft for them that allowed missions to be completed as required.
Add Lockheed Martin to My Watchlist, and see the key test that Lockheed Martin passes.
A Foolish final thought
Even with defense spending likely to be cut as a result of the debt-ceiling agreement, the federal government will continue to need many of the products and services these companies supply. With all these stocks trading within 20% of their 52-week lows, now may be a good time to invest. For more on how other defense stocks might be feeling the pinch, read fellow Fool Katie Spence's view on the industry.
