With the presidential candidates arguing over who can best protect the country at a time when terror risk is as high as ever, it's no wonder that Wall Street has been generally supportive of the defense sector. Indeed, given the market indices' poor performance so far this year, the more than 4% return on the Dow Jones Aerospace index looks good. General Dynamics ( GD), which is up more than 7% so far this year and more than 3% since I last highlighted it in April, has fared even better than most. There's a reason for that: The company has consistently posted better-than-expected, high-quality earnings growth. It's likely to continue given the strong congressional support for many of its large defense programs and the inevitable recovery in its commercial aerospace business, Gulfstream. While the shares are no longer a deep bargain relative to other names in the group, trading at a P/E ratio of 15 times the consensus earnings estimate of $6.43 per share for 2005, that is still at the low end of the P/E valuation range of 15 to 18 for its defense company peers. General Dynamics' second quarter was even better than it appeared on the surface. The company reported earnings of $1.47 per share, ahead of the consensus estimate of $1.40, even though the numbers included 4 cents worth of unusual costs such as acquisition-related expenses and asset impairments. Sales grew double digits organically in all divisions except for Combat Systems, where sales were off 5% to 8% on a comparable basis due to the timing of deliveries of Stryker combat vehicles.