Only Some Defense Firms Will Benefit From War on Terrorism

While some investors are still licking their wounds from last week's market free fall, others see the plunge as an opportunity to buy oversold stocks.

Indeed, given the recent damage to the market, several options exist. But because the terrorist attacks have turned the business world upside down, many mutual fund managers are waiting to see just how the disaster affects businesses. But a majority of money managers agree on at least one sector: aerospace, defense and intelligence companies will benefit from the U.S. war on terrorism.

What fund managers don't know, however, is just how the U.S. will fight terrorists armed with box cutters. Will large, traditional military contractors receive the lion's share of the military budget, or small outfits specializing in intelligence and surveillance? ...