Defense News Roundup: Missiles for Kuwait, and Laser Guns for America

Here's our weekly rundown of the major stories in defense spending.

Mar 2, 2014 at 4:00PM

The U.S. military has a reputation as a somewhat secretive organization. But in one respect at least, the Pentagon is one of the most "open" of our government agencies. Every day of the week, rain or shine, the Department of Defense tells U.S. taxpayers what contracts it's issued, to whom, and for how much -- all right out in the open on its website.


So what has the Pentagon been up to this week?

More than it had been up to before this week, that much is for sure. DoD is budgeted to spend about $6.2 billion a week on military hardware, infrastructure projects, and supplies in fiscal 2014. (A further $5.6 billion a week goes to pay the salaries and benefits of U.S. servicemen and servicewomen). Spending has been exceedingly light this year, however, with the Pentagon awarding only about $21.9 billion in contracts year to-date -- less than half the budgeted amount. Last week, though, the Pentagon finally got out its checkbook and began spending significant bank, about $5.02 billion in total.

And what did the generals get for their (read "our") money?

More green energy for us
Building on initiatives such as its $7 billion in Power Purchase Agreements awarded last summer, the Pentagon announced this past week that it was awarding five companies -- Chevron (NYSE:CVX) and SunEdison (NYSE:SUNE) among them -- $25 million worth of awards to produce and sell renewable energy at Navy and Marine Corps installations in California and Arizona.

And more planes, too
Green energy gets all the headlines these days, but a much bigger deal for Boeing (NYSE:BA) was the Navy's decision to order 16 of the company's new P-8A Poseidon subhunting aircraft. The order will mean $2.1 billion in additional revenues to Boeing. And because the P-8A is based on a Boeing 737 chassis, the order added 16 planes to Boeing's order book for its Commercial Airplanes division as well. Incidentally, those were the only new orders that the civilian side of Boeing's plane business received last week.

While Kuwait gets all the rockets
In a deal nearly as big, defense contractor Raytheon (NYSE:RTN) booked a big win Friday when the Department of Defense brokered a deal to have Raytheon supply the Kuwaiti military with two sets of PATRIOT air defense systems (called "fire units" to distinguish them from the actual missiles they fire). The contract will be worth $655 million to Raytheon, and is due for delivery in April 2018.

Patriot missile at work. Photo: Raytheon.

Opportunities on the horizon
Probably the most interesting contract announced at the Pentagon last week, though, was a smallish, $25 million award that Lockheed Martin (NYSE:LMT) won from the U.S. Army. Lockheed has been hired to "design, develop, fabricate, test, and deliver" a new type of weapons system called the High Energy Laser Mobile Demonstrator, or HEL MD.

A smaller scale version of the Laser Weapon System, or LaWS, that the U.S. Navy demonstrated last year for use in naval shipborne defense against cruise missiles and aircraft, the HEL MD is a pilot project to defend ground forces against incoming rockets, artillery and mortar rounds, and small unmanned aerial vehicles. With an entire guided missile destroyer to support it, and that destroyer's power plant to supply it, the LaWS is designed to put out a full megawatt of power. HEL MD, in contrast, will be smaller in size, and capable of being moved around by a single Heavy Expanded Mobility Tactical Truck.

Already, the Navy has demonstrated the effectiveness of its LaWS in shooting down multiple drones in exercises off the U.S. West coast in 2012 -- even at less than the desired 1MW power throughput. As technology's march toward "smaller, better, faster, stronger" continues, development of (and revenues from) new weapons systems such as the HEL MD are inevitable.

See the Navy's new Laser Weapon System at work in this video

Thanks for all the great stock tips, Pentagon!
You don't always have to look far to find good investments. Sometimes, profiting from our increasingly global economy can be as easy as investing in your own backyard -- and the Pentagon's helpful habit of publishing all its contracts daily as they're awarded certainly makes that easier. Want to find more "easy to understand" investments? Read The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.

Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Chevron and owns shares of Lockheed Martin and Raytheon Company. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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