Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, military contractor VSE (Nasdaq: VSEC) has earned a coveted five-star ranking.

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

VSE facts

Headquarters (Founded)

Alexandria, Va. (1959)

Market Cap

$147.6 million


Technical services

Trailing-12-Month Revenue

$959.7 million


CEO Maurice Gauthier (since 2008)

CFO Thomas Loftus (since 2002)

Return on Capital (Average, Past 3 Years)


Compound Annual Revenue and Net Income Growth (Over Past 3 Years)

25.5% and 32.3%


$7.1 million / $0


Northrop Grumman (NYSE: NOC)

General Dynamics (NYSE: GD)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS.

On CAPS, 97% of the 469 members who have rated VSE believe the stock will outperform the S&P 500 going forward. These bulls include All-Star rfl6857483, who is ranked in the top 5% of our community, and circaclown.

Just last month, rfl6857483 offered an explanation for VSE's recent price slide:

Few stocks are cheaper than this. Apparently the news about how the [Department of Defense] is going to cut down on contracting for services is driving this. I worked for them for 35 years and during that time the trend was going the other way because contactors can be fired while civilian employees can't. My bet is nothing much will change.

Since Defense Secretary Robert Gates announced last month that he planned to sharply cut back on support contracting spending, shares of VSE are down more than 15%, while its bigger defense brothers Northrop, General Dynamics, Lockheed Martin (NYSE: LMT), and Boeing (NYSE: BA) have all shed less than 10% of their value. Of course, when you couple VSE's small size with the fact that it now trades at a healthy forward P/E discount to those same giants, VSE's upside may just be the highest of the bunch. More importantly, with a debt-free balance sheet, VSE investors should also have their downside nicely protected.

CAPS member circaclown elaborates:

A rapidly growing government contractor with significant insider ownership. ... There is more, it is a rare micro cap that is debt free, and if that is not enough, has a large amount of cash. ... My opinion is that the stock price is not depressed as it looks but stalled. It seems like it has a hard time competing with larger contractors in the US and has lost contracts also in the past for this reason. This would be a red flag, but the company is very strong overseas.

What do you think about VSE, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. General Dynamics is a Motley Fool Inside Value selection. Try any of our Foolish newsletter services free for 30 days.

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