When India confirmed this week that it plans to order six more C-130J Hercules transport aircraft for its air force, Lockheed Martin (NYSE: LMT ) investors in America were thrilled. Over in India, however, the reaction can be summed up in one word: shock.
That's how DefenseNews.com describes it, at least, saying Indian Army and Air Force officials have been taken aback by the government's decision to advance a transports purchase when the country's more pressing needs are for fighter jets, attack helicopters, and ground artillery.
Mind you, no one's arguing the C-130 is a bad airplane. To the contrary, Lockheed's C-130 is the most popular military transport on the planet. But even so, it's not like India suffers from a lack of transports.
The country already spent $962 million to buy six C-130Js back in 2007. Four years later, India placed an order for 10 of Boeing's (NYSE: BA ) giant C-17 transports in a deal that some analysts value as high as $4.5 billion. And that's on top of an air force that already boasts some 96 An-32s and 58 Hawker Siddeley HS 748s (each capable of carrying about 50 passengers), plus 17 monstrous Il-76 airlifters (each capable of airlifting a T-72 heavy tank into battle). Apples to apples, the Indian air force already heavily outweighs that of chief rival Pakistan.
A full shopping list
Meanwhile, with India (like most countries) having only limited funds available to spend on defense, critics of the C-130J deal argue that the country really needs to prioritize. According to DefenseNews.com, India has $4 billion worth of high-priority defense projects in the pipeline, awaiting finalization over just the next few months -- and $40 billion in projects farther down the pike.
For example, the Indian army is pushing to finalize a purchase of 145 M777 howitzers from BAE Systems (NASDAQOTH: BAESY ) -- a deal that could be finalized at a cost of only about $101.5 million once they get around to hammering out the details. More significant purchases are expected from Boeing, which at last report was negotiating sales to India of:
- 22 AH-64 Apache attack helicopters
- 15 CH-47 Chinooks
- Four P-8I maritime patrol aircraft
Combined, these arms sales could generate as much as $1.7 billion for Boeing. But instead of getting the details firmed up and the contracts signed, India has pushed the deal for Lockheed's planes to the head of the line.
Good news for Lockheed? Great news for Boeing!
The news isn't all bad for Boeing, however. You see, India's intention to buy the C-130s was first reported back in September. Back then, word also had it that New Delhi wanted to buy another six C-17s from Boeing. None of this had been confirmed at that time, however.
Now that the C-130J rumor has turned out to be true, maybe it's also true that India will sign a C-17 purchase agreement with Boeing. That could yield yet another $2.7 billion for Boeing -- bringing the company's potential revenue haul from the subcontinent to a whopping $4.4 billion.
Lockheed's $1 billion win may be only a prelude to an even bigger contract win for Boeing.
Defend your portfolio from the next market crash
Many investors fear that today's high-flying stock markets are due for a dive. But the good news is that as stock prices go down, dividend yields get even richer -- and already, defense stocks pay some of the richest dividends around.
While they don't garner the notoriety of high-flying growth stocks, dividend stocks are also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.