Will Sirius XM (Nasdaq: SIRI) get delisted from the Nasdaq? Will Blockbuster (NYSE: BBI) file for bankruptcy? It doesn't matter -- in either case. As I've argued in the past, both of these entertainment stocks look dreadfully overvalued.

Personally, I'd much rather spend my time and focus my efforts on finding bargains in the market, and as I've also argued previously, some of the best bargains to be had in the market are found in the defense sector. And with our Defense Portfolio still stubbornly refusing to pace the rise in the S&P 500, this remains true today:

Company

Starting Price*

Recent Price

Total Return

General Dynamics (NYSE: GD)

$56.06

$75.24

34.8%

Raytheon (NYSE: RTN)

$41.74

$56.84

35.4%

Lockheed Martin (NYSE: LMT)

$76.44

$85.94

12.5%

AeroVironment

$29.96

$24.75

(17.4%)

iRobot

$11.49

$16.04

35.4%

Force Protection

$4.57

$6.19

43.3%

AVERAGE RETURN

 

 

24%

S&P Spyder

$87.28

$116.55

33.5%

DIFFERENCE

 

 

(9.5)

Source: Yahoo! Finance.
*Tracking began on July 10, 2009. Portfolio is equal-weighted, with "recent price" being set at market close on the Friday preceding publication, and adjusted for stock splits and dividends.

Defense news roundup
Once again this week. Lockheed Martin takes the prize as the company working hardest to catch up to the rest of the market. While best known for building military aircraft, Lockheed's becoming ever more the all-around solutions provider to the Pentagon. For example, this week the contractor landed a near-$1 billion contract to manufacture equipment capable of jamming transmissions to improvised explosive devices, preventing their going "boom!"

While the contract was awarded by the U.S. Navy, you can expect deployment to come by way of the U.S. Marine Corps -- and that's not all. The devices Lockheed's working on have already been approved for sale to U.S. allies in the wars ongoing in Iraq and Afghanistan.

One if by land, two if by sea
Lockheed also notched a win with the Navy proper this week. As you've no doubt heard, there's an epic struggle ongoing between two of our portfolio companies, Lockheed and General Dynamics, for the right to build 10 more littoral combat ships for the Navy. Lockheed gave itself a big flipper up in that competition when its first contribution to the fleet, the USS Freedom, was reported to have just completed its third successful drug interdiction mission. After using its spiffy new 40-knot engines to chase down a speedboat, the Freedom deployed a Sea Hawk helicopter to force the smugglers to beach, resulting in a 2,100-kilo drug bust.

Think Lockheed will mention these successes as part of its bid in April, to build the next 10 boats? Count on it.

Do the European hokey-pokey
"Put your left foot in, take your left foot out, put your left foot in, and shake it all about ..."

How's that for a bit of musical accompaniment to the other big story this week? In recent days, market pundits have been all a-flutter over the implications of Northrop Grumman (NYSE: NOC) dropping out of the competition to build the Air Force's new refueling tanker.

Supposedly, the removal of one of the two presumed bidders tied a bow on the gift of this multi-billion contract to Boeing (NYSE: BA). But Northrop partner EADS, after urging Northrop to bid on the contract and then backing up its buddy in saying the game was rigged against them, is now making noises about putting in a solo bid for the work.

Bids on the KC-X Tanker Project are supposedly due in May. But after EADS complained that it cannot possibly submit a bid on its own within that timeframe, the Pentagon took the bait and suggested that, sure, if EADS would like to participate, and just needs a little more time to get its papers in order, the Pentagon might be flexible on the timeframe.

Foolish takeaway
What's it mean for investors? Boeing appears to have secured a commanding lead in this race already -- if for no other reason than the fact that all parties involved have got to be just plane exhausted by now, and ready for this near-decade-long dance to sound its final note.

Who's the hands-down best bargain in the defense industry? Motley Fool Rule Breakers knows the answer. Take a free, 30-day trial and find out.

Fool contributor Rich Smith owns shares of AeroVironment. General Dynamics is a Motley Fool Inside Value pick. AeroVironment and iRobot are Motley Fool Rule Breakers recommendations. The Motley Fool has a disclosure policy.