Top Five Aerospace and Defense Stocks

BOSTON (TheStreet) -- The following aerospace and defense stocks receive top marks from our equity model. They are ordered by their potential to appreciate, from worst to best.

5. L-3 Communications(LLL) sells command, control, communications and surveillance systems.

The numbers: Fourth-quarter net income decreased 14% to $227 million, but earnings per share fell less, by 4% to $1.93, helped by a smaller float. Revenue grew 4.9% to $4.2 billion. The operating margin widened from 10% to 11%. L-3 holds $1 billion of cash and $4.1 billion of debt.

The stock: L-3 Communications advanced 25% in the past year, lagging behind the Dow Jones U.S. Aerospace and Defense Index. The stock trades at a price-to-projected-earnings ratio of 10, a discount to peers. The shares offer a 1.8% dividend yield.