This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

One of the Big Four Defense Stocks Is Priced to Buy

Editor's note: Our Pre-Memorial Day special examines military-related stocks and how to buy, sell or trade them. This feature includes a video by Gregg Greenberg, Defense-Stock Domination; and articles by Marc Courtenay One Priced to Buy; Robert Weinstein Bigger Guns, Bigger Profits; Richard Saintvilus Boeing's Offense Is Defense; Richard Suttmeier Sequester Survivors; and Richard Cox Bullish Earnings Support Defense.

NEW YORK ( TheStreet) -- First off, here's your current-events quiz for the day. Who is the U.S. Secretary of Defense? If you don't know off the top of your head, don't feel bad, because I didn't either.

Chuck Hagel was sworn in as the 24th Secretary of Defense on Feb. 27, 2013, becoming the first enlisted combat veteran to lead the Department of Defense. You may recall that he was elected to the U.S. Senate in 1996 and represented Nebraska until 2009.

Secretary Hagel was also a businessman earlier in his career. During the 1980s he co-founded Vanguard Cellular Systems, which became one of the largest independent cellular networks in the country. Secretary Hagel also served as president of McCarthy & Company, an Omaha, Neb.-based investment bank.

He understands war, the defense industry and -- from what I've read about him -- big business and international economics. As a senator, Hagel chaired the Foreign Relations International Economic Policy, Export and Trade Promotion Subcommittee and the Banking Committee's International Trade and Finance and Securities Subcommittees.

So when it comes to the Big Four defense contractors, Boeing (BA - Get Report), Lockheed Martin (LMT - Get Report), Raytheon (RTN - Get Report) and Northrop Grumman (NOC - Get Report), all should feel more secure with Secretary Hagel's background and credentials.

The question I'd now like to pose is, which of these companies is the most attractively priced?

Each has had a nice run higher in 2013. Lockheed Martin currently has the best dividend yield-to-price (around 4.3%) and Boeing has the lowest (1.97%). Shares will cool down in a stock market correction.

NOC goes ex-dividend on May 23, 2013, which means you would have had to own it by the close of the market on May 22 to be eligible for this quarter's dividend.

If you're considering NOC at this point, you should be able to lock in a yield-to-price of around 3.03%. NOC shares were recently trading for more than $80, up nearly 20% this year. Its price-to-earnings ratio of 10.3 is less than the S&P 500's 17.7. This is an important metric for value investors.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BA $132.45 1.20%
LMT $237.21 0.51%
NOC $211.65 0.52%
RTN $127.91 0.94%
AAPL $92.92 -0.75%


Chart of I:DJI
DOW 17,686.02 +34.76 0.20%
S&P 500 2,053.44 +2.32 0.11%
NASDAQ 4,730.30 +4.6610 0.10%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs