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

Aerospace, Defense Funds Are Quietly Beating the Market in 2014

Fidelity Select Defense & Aerospace Portfolio(FSDAX), an actively managed mutual fund, holds stakes in a number of suppliers, including United Technologies(UTX) and Honeywell International(HON).

"The revenue outlook is improving because of new orders and demand for spare parts," Welo says.

Make no mistake, defense cuts will hurt some contractors. After peaking at $700 billion in 2010, the defense budget is likely to hit around $500 billion in coming years. The number of soldiers in the Army will drop from a recent high of 570,000 to 440,000.

But some contractors can continue to thrive because the budget will still fund many weapons systems.

Among the healthiest performers has been Lockheed Martin(LMT), the nation's biggest defense contractor. In the first quarter this year, sales rose 4%, while earnings climbed 23%.

The company derives a big percentage of its revenue from the F-35 Joint Strike Fighter, a program that the Air Force is planning to continue.

Besides weapons, Lockheed Martin is also a major supplier of information technology to many parts of the government. Demand for technology systems should continue to grow even if the number of military personnel drops in the future.

Another stock that recorded big gains in the past year is General Dynamics(GD). While the company is known for producing submarines and tanks, much of the growth has come from Gulfstream private jets. Some corporate customers are waiting four years to get their hands on models that sell for more than $60 million. Private jets should soon account for half the company's earnings.

>>Read More: Best Buy: Dead and Dangerous Money

>>Read More: Microsoft, Alliance Data Among Picks for a Rising Rate Cycle

At the time of publication, the author had no position in any of the funds mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

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
AAPL $110.78 0.36%
FB $94.01 2.11%
GOOG $641.47 2.32%
TSLA $246.15 -0.57%
YHOO $30.85 0.46%


Chart of I:DJI
DOW 16,776.43 +304.06 1.85%
S&P 500 1,987.05 +35.69 1.83%
NASDAQ 4,781.2640 +73.4890 1.56%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs