Why Shares of Exelis Jumped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Exelis (NYSE: XLS  ) jumped as much as 10% today after the company announced it would supply Boeing (NYSE: BA  ) with airframe substructures.

So what: Exelis will build composite substructures for the 787 Dreamliner in its Salt Lake City manufacturing center. The work will begin immediately and should start contributing to revenue soon.  

Now what: There weren't a lot of details about the deal so it's hard to determine exactly what the effect will be. We know that Boeing expects to deliver 1,750 aircraft from the 787 family in the next 20 years, so this is a long-term opportunity. I think this bolsters the investment thesis for Exelis, and at 12.5 times earnings I'd say shares are attractively priced.

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  • Report this Comment On December 12, 2013, at 9:23 PM, Mikeanderson wrote:

    Exelis, will be bought out for sure in days. Load it up. This is company stock is way undervalued. Crazy, it should be valued at $39 when the bid offer comes in. If anyone follow mike recommendation and john in dec 5 in other article, they recommend to buy jan $17.5 call, it was only $0.4 to $0.5 you would have pocket 200 plus %%%.

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