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Tim Brown: L-3 Has Momentum

It's time to get on board this aerospace and defense company.
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Momentum is a huge part of the game. If the other team gets some and you don't answer back, it could steamroll right over you.

In football, you never want to be behind. But if do find yourself down in the score, you want to make sure the other team doesn't pull away. If you are too far in the hole, you have to increase your risk. You don't want to do that -- you want to be in control and follow your game plan.

In investing, momentum is different, but it can have pretty much the same impact if you are on the losing end: You will get left in the dust if you don't take action at the right time.

I think

L-3 Communications


is starting to roll in the right direction, and now is the time to get on board.

L-3 is a big-time aerospace and defense company that does a ton of things. It provides command, control, communications, intelligence, surveillance and reconnaissance systems. Add aircraft modernization and maintenance, as well as government services mostly in the U.S., to that list. Its reconnaissance unit offers "fleet management sustainment and support" and a whole host of services and maintenance needed militarily -- everything from strategic and tactical signals intelligence systems to network equipment and encryption management.

The company also put its money where its mouth is by beating its second-quarter numbers last month. It said at the time that it earned $1.67 a share, which handily beat analysts' consensus of $1.49 a share. It also said its net sales grew by 9%, increasing to $3.7 billion from $3.4 billion. Last month, the company declared its quarterly dividend of 30 cents a share -- it pays out in September. The dividend blows the industry average dividend away.

In short, this is a great company that had a stronger-than-expected quarter and is on the way up from its 52-week low of $87.40, which it hit in mid-July. Also, take a look at the data. It has a PEG of 1.38 and a forward price-to-earnings ratio of 13.76., which means it is slightly undervalued by the Street.

It has institutional support of almost 88%, meaning that long-term shareholders own a bulk of the shares. It has revenue of $14.48 billion and quarterly year-over-year earnings growth of almost 48%.

I like the stock price. It's trading at about $104 a share in midday trading. The stock has performed very well compared with the rest of the market. L-3 has gone up 6.03%, while the

S&P 500

has fallen 21.59%.

Keep moving the chains!

At the time of publication, Brown had no positions in stocks mentioned, although positions may change at any time.

Tim Brown played 16 seasons in the NFL, where he made nine Pro Bowls. After a brief stint with the Tampa Bay Buccaneers in 2004, Brown retired as an Oakland Raider. He was a Heisman Trophy winner in college for Notre Dame.