It's that time of year again. For some, there's a chill in the air and snow on the ground, and among investors, questions abound. Questions like: "What's the best defense stock to buy in 2014?"

Answering that question is a little tricky. The "best defense stock" for me may not be "best" for you, or your particular style of investing. Because valuation matters in investing, let's start off with a few numbers, and see where they lead us.

 

Market Cap ($Billions)

Price-to-Earnings Ratio

Price-to-Free Cash Flow

Growth Rate

Dividend Yield

Boeing (BA -2.87%)

$103.9

24.2

11.5

11%

2.1%

Lockheed Martin
(LMT -0.20%)

$47.3

15.8

34.4

7%

3.7%

General Dynamics (NYSE: GD)

$33.1B

Negative

17.5

7%

2.4%

Raytheon (RTN)

$29.1B

15.3

14.8

10%

2.5%

Northrop Grumman (NOC -0.02%)

$25.6B

12.8

12.6

4%

2.2%

Huntington Ingalls (HII 0.50%)

$4.4B

20

27.2

27%

0.9%


What you see above is a chart detailing the valuations on most of the major defense companies in America. But which of these is the "best" to buy in 2014? That depends on what you're looking for.

Traditional value
If you're interested in traditional value, then there's really only one stock in the group that qualifies as a real bargain: Huntington Ingalls. This military shipbuilder, a recent spinoff from Northrop Grumman, sports the third-highest P/E ratio, true. But analysts expect Huntington to outgrow its peers by a significant margin, expanding profits at a 27% annual clip over the next five years. If they're right, that's a growth rate fast enough to make even a 20 P/E look good.

Hidden value
Contrarians, on the other hand, might prefer General Dynamics. The only "unprofitable" stock of the bunch, General Dynamics owes its unprofitability to some ill-considered acquisitions made in the IT sector some years ago -- acquisitions that were written down last year, but which have not impaired the company's ability to continue generating cash profits. If it can get its earnings growth rate up a bit, this stock might surprise you.

Right place, right time
Weak growth is a problem at Northrop Grumman, too. But you can't argue with the business model. In the air, on land, and at sea, drones are the future. And from the Fire Scout to the Global Hawk to the ultra-secret new RQ-180, among publicly traded defense companies, there's no company better at building drones, and winning drone contracts, than Northrop Grumman. It's definitely one to watch.

Most international
Geographically speaking, the "best defense stock" on this list is undoubtedly Raytheon. Among pure-play defense contractors, no one gets more revenue from outside U.S. borders -- and far from congressional budget cutters -- than Raytheon does. The company's business model, centered around making "bullets" for other company's "guns" to shoot, also looks attractive. Build a tank, or a fighter jet, or an aircraft carrier for the Pentagon, and chances are you'll be waiting years, or decades, for it to get obsolete so you can sell another one. But Raytheon's rockets? No sooner does the military fire one off, than it's time to order a new one from Raytheon.

Most staying power
Which is not to say that long-lived assets are all bad. Lockheed Martin, for example, has a G.I. Joe-with-kung-fu-grip-like hold on the international fighter jet market. It's the only defense contractor out there building true fifth-generation fighter jets -- and that fact alone has already won it one contract over competing manufacturers of older jet models. Plus, Lockheed controls one-half of the Navy's Littoral Combat Ship franchise. Those two products alone ensure it will be raking in billions in revenues annually, for decades to come -- and turning a lot of that money over to shareholders in the form of an industry-leading dividend yield.

And the best all-around investment?
Personally, I'm split on this one. On the one hand, I like Boeing a lot for its rock-solid balance sheet, strong dividend yield, and stronger record of free cash flow production. On the other hand, multiple recent contract losses in the fighter jet space tell me that Boeing will need to depend greatly on its commercial airliner business for future profits. Its days as a leading defense contractor, I fear, are numbered.

For that reason, when it comes to picking a single "best defense stock for 2014," I'm going to have to circle back and say Huntington Ingalls looks best to me. Its fastest-in-the-industry growth rate, attractive valuation, and fortuitous positioning in the market for both submarines and aircraft carriers (underwater aircraft carriers, anyone?) tell me this company has weapons-lock on a crucial growth area for the military. At today's prices, I think it's the single defense stock offering the brightest future for investors.