4-Star Stocks Poised to Pop: SAIC

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Based on the aggregated intelligence of 115,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, government defense contractor SAIC (NYSE: SAI) has earned a respected four-star ranking. While five-star stocks have been the best performers, our data has shown that four-star stocks still outshine the market by a significant margin and shouldn't be taken lightly; conversely, low-rated stocks have woefully lagged the market average.

With that in mind, let's take a closer look at SAIC's business, and see what CAPS investors are saying about the stock right now.

SAIC Facts

Headquarters (Founded)	San Diego (1969)
Market Cap	$7.3 billion
Industry	Electronic Components
TTM Revenue	$9.63 billion
Management	CEO Kenneth Dahlberg (since 2003) CFO Mark Sopp (since 2005)
Return on Equity (average last three years)	18.2%
Competitors	Lockheed Martin (NYSE: LMT) L-3 Communications (NYSE: LLL)
CAPS members bullish on SAI also bullish on	Apple (Nasdaq: AAPL) Microsoft (Nasdaq: MSFT)
CAPS members bearish on SAI also bearish on	General Motors (NYSE: GM) Ford Motor (NYSE: F)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 659 of the 694 members who have rated SAIC -- some 95% -- believe the stock will outperform the S&P 500 going forward. These Foolish bulls include bjforfun and ValueArbitrage, both of whom are ranked in the top half of our community.

In late June, bjforfun wrote that "It doesn't matter who the next president is, this company will keep winning government contracts. It is very well managed, and cheap!"

A more recent (and much longer) pitch by ValueArbitrage shares that bullish attitude, elaborating on SAIC's prospects going forward. Here's an excerpt:

This high quality, capital light business with multiple levers for above average earnings growth over the next few years is simply to cheap at current prices. A combination of revenue growth, ... margin improvements (through a combination of addressing redundant costs, simplifying its organizational structure, mix shift to higher margin businesses,etc.), and prudent buybacks should drive cash earnings per share [higher]...

I love companies like [SAIC] (at the right price, of course) that operate under large long term contracts, creating considerable visibility into future earnings. This is especially the case in uncertain environments like today's, where estimating future earnings can be a futile exercise at best.

What do you think about SAIC, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 115,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.