OKLAHOMA CITY -- Investors have new reasons to choose sides in the military vehicle space.


( NAVZ) has a fresh battle on its hands, with thousands of its workers striking even as it lands huge orders for Mine-Resistant Ambush-Protected vehicles. Meanwhile,

General Dynamics

(GD) - Get Report

-- a partner to smaller

Force Protection

(FRPT) - Get Report

-- is gaining some ground following an especially strong third-quarter performance.

Late Tuesday, Navistar revealed that 3,700 of its unionized workers have gone on strike at nine of its facilities. Importantly, some of those employees work at an Illinois-based factory charged with manufacturing thousands of MRAP vehicles on a tough delivery schedule.

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For its part, Navistar claims that it has adopted special measures designed to ensure "uninterrupted delivery" of its vehicles in a "timely manner." For now, at least, experts agree that the company can avoid costly delays and protect its MRAP program. If the strike drags on, however, some analysts could grow concerned about the company's business as a whole.

"We expect that NAVZ stockpiled some engines -- especially for MRAP -- to offset the potential immediate impact of a walk-out at its engine and casting facilities," Wachovia analyst Andrew Casey wrote on Wednesday. "However, in a prolonged strike, the company likely would run into engine shortages that could affect 50% to 55% of revenues."

Notably, Casey added, "while we have no way of knowing how long this walk-out will last, we do not believe that investors should assume that it will be a short strike like those that occurred" at other automobile companies.

Casey remains cautious in the meantime. He has a market-perform rating on Navistar's stock, which he values at $63 to $66 a share. The stock fell 2.4% to $67.60 on news of the strike but still remains near the upper end of its wide 52-week range.

Meanwhile, shares of General Dynamics zoomed ahead after the company toppled third-quarter expectations and boosted guidance for the entire year.

During the latest period, General Dynamics saw revenue jump 13% to $6.8 billion -- hitting Wall Street targets -- as demand for its commercial jets and combat vehicles took off. Profits surged 25% to $546 million, with earnings per share of $1.34 blowing past the $1.25 consensus estimate.

General Dynamics reported solid growth across most of its business lines. But the company's combat systems division, which supplies vehicles for the multibillion-dollar MRAP program, posted the strongest metrics of all.

There, revenue grew by 37% -- almost triple the company-wide rate -- while profits jumped an even stronger 39%. With the military busy placing new MRAP orders, including a recent one fielded by General Dynamics' joint venture with Force Protection, that momentum could very well continue.

Certainly, General Dynamics itself is hoping for the best. Now, the company says that it expects to post 2007 earnings of $5 to $5.05 a share -- comfortably above the $4.95 consensus estimate -- "on the basis on this quarter's results and a refined understanding of how the company's business sectors will perform for the remainder of the year."

Investors cheered, sending shares of General Dynamics up 1.7% to $88.56 -- very near an all-time high -- following the company's bullish update.