Top Five All-Around Value Stocks

---

L-3 Communications Holdings(LLL Quote), a military-equipment company, has been rated buy since July 2005. The company recently reported that its second-quarter earnings more than tripled. Higher defense spending worldwide, together with the company's recent acquisitions and a healthy backlog order book, has encouraged management to raise guidance for fiscal 2007.

L-3 Communications is expected to benefit from increased defense spending, as it is ranked among the top 10 biggest federal contractors. Also, higher security measures adopted by the airports throughout the world will create a new demand for L-3's baggage-screening systems and surveillance programs.

---

Aerospace and defense contractor Northrop Grumman(NOC Quote) has carried a buy rating since July 2005. Northrop has seen revenue and net income increases, and the federal government's fiscal 2008 budget request continues to favor spending on defense and homeland security.

The company's growth will also be driven by its acquisition of high-tech defense manufacturer Essex Corp., which was completed on Jan. 26. (There is still $575 million remaining under the share repurchase authorization, which is expected to be completed by the end of fiscal 2008.) Northrop Grumman's business is highly cyclical and dependent on government spending. A reduction in national security spending could cause a risk to its buy rating.