Last July, General Dynamics
In fact, the more you study GD's stock, the more you notice that investors consistently underestimate the General's profit-making prowess. When it invariably proves itself, these same investors first overreact, then grab their profits and run, lest the company fail to repeat its outperformance (though it always does). I have no such fears.
Top dog in the defense industry
Over the course of fiscal 2008, General Dynamics grew its revenue less than 8%, yet translated this moderate sales growth into an amazing 22% rise in per-share profits. Operating profit margins tacked on more than 100 basis points to reach 12.5%, a commanding result compared to pretty much any other defense contractor you can name. Lockheed Martin
The future's so bright...
According to yesterday's news, General D shows no signs of losing momentum in 2009. To the contrary, with sales up just 8% last year, backlog -- industry parlance for future sales -- grew more than 22%. Far from slowing down in its first year under the Obama Administration, General Dynamics seems likely to accelerate its outperformance.
Skittish investors may worry that with long-term growth posited at 9.4%, General Dynamics will prove anything but dynamic for their portfolios. But the General's single-digit price-to-free cash flow ratio, spotless balance sheet, and strong prospects for revenue growth all convince this Fool that these shares are just about bulletproof.
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