Playing for the Real Money in Homeland Defense
Lockheed, with its shares down 0.8% in the past year, has the relatively weakest stock of the trio. That compares with a nearly 37% jump enjoyed by Accenture and a 13.5% increase in Computer Sciences shares. For that reason, some analysts are bullish on Lockheed, calling the world's largest defense contractor's shares undervalued.
Shares of Lockheed were up 38 cents, or 0.79%, to $48.61 in recent trading Wednesday; Accenture shares were down 17 cents, or 0.72%, to $23.56; and shares of Computer Sciences were up 11 cents, or 0.26%, to $42.80.
On Tuesday, Legg Mason analyst Troy Lahr initiated coverage on Lockheed with a buy rating and included it on the firm's list of compelling ideas. Lahr noted that the stock is trading at an enterprise value-to-earnings ratio of 8, below the median multiple of the S&P 500 of 11.
Last month, meanwhile, Jefferies analyst Sam Pearlstein noted that several near-term contract competitions, including US-Visit, will determine whether Lockheed will have to raise 2005 revenue and earnings guidance in July, when it reports its second-quarter results. He has a buy rating on the stock and his firm hasn't done any banking with Lockheed.Ultimately, though, the US-Visit contract would be most important to Computer Science's future, analysts said. "CSC, I think, has less significant long-term prospects in its commercial consulting and outsourcing business, whereas Accenture has more opportunity in consulting and business-process outsourcing that makes it less reliant on winning these large federal contracts," said Bernstein analyst Rod Bourgeois, who has an outperform rating on Accenture and market perform rating on Computer Sciences.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV