It's been nearly four years since Textron (TXT 0.65%) unveiled its new Scorpion light attack fighter jet -- a revolutionary new warbird, designed and built in record time with off-the-shelf parts, and costing just a fraction of what taxpayers pay for most modern fighter jets.

Able to carry more than 9,000 pounds of ordnance between its wings and internal weapons bay, flying at two-thirds the speed of sound, and reaching altitudes of 45,000 feet, Scorpion should be a Pentagon budget-cutter's dream. It's said to cost just $3,000 per hour to fly, and less than $20 million a unit to buy. Yet to date, Textron hasn't been able to sell a single one.

That may soon change.

A Scorpion jet in flight.

The Scorpion jet is loaded for bear and ready to compete for a big Pentagon contract. Image source: Textron.

Friends in high places

Last week we learned that President Donald Trump will nominate Textron Systems head Ellen Lord to become the Department of Defense's new undersecretary of defense for acquisition, technology, and logistics. If confirmed by the Senate, that would make her the Pentagon's chief weapons buyer, responsible for allocating a Defense Department budget that could reach $640 billion next year. 

For Textron, the timing couldn't be more propitious.

Timing is everything

Right now, the Pentagon is considering spending $6 billion (or more) to buy a new light attack warplane to first supplement, and later maybe even replace, its fleet of A-10 Thunderbolt II ground attack fighters.

The A-10 force, although invaluable in providing close air support today, is aging and due for replacement. Historically, the Air Force has argued that new F-35 Lightning II fighter jets from Lockheed Martin can take over the A-10's mission. But at a price tag of $95 million each, and costing more than $67,000 per hour to fly, using stealthy fifth-generation strike aircraft for ground attack seems kind of like overkill -- and uneconomical to boot.

Which brings us to the Air Force's latest solution, dubbed the OA-X project. Here, the Air Force is exploring the possibility of buying a light attack fighter for close air support roles -- something probably less capable than the A-10, which is no longer in production, but a whole lot less expensive than Lockheed's F-35. Three planes are reported to be in contention for OA-X: Embraer's A-29 Super Tucano and Textron's AT-6 Wolverine -- both slow-moving turboprop aircraft -- and also Textron's Scorpion jet, a more capable ground attack plane that could also fight air-to-air.

Judging from the price tag the Air Force is looking to pay, and the capability it needs to buy, Textron's Scorpion appears to be tailor-made for the OA-X role. And if the person who will soon be in charge of buying weapons for the Pentagon hails from the same company that makes the Scorpion, well, one imagines that she might be inclined to agree with that assessment.

What it means for investors

At a valuation of just 0.9 times sales, Textron stock is currently the only large defense contractor stock selling for less than its sales -- my rule of thumb for spotting bargains in the defense sector. It may not remain this cheap for long, however, as it appears that I'm not the only one thinking Textron may get a leg up in future Pentagon purchasing decisions.

One day after Trump made his pick for Pentagon acquisitions chief known, shares of Textron stock were up nearly 4%.