5 Picks for 2012 in Aerospace, Defense

NEW YORK ( TheStreet) - The global aerospace and defense sector is seen having a stable 2012 outlook, as per the estimates of Fitch Ratings. For the commercial segment, the rating company projects deliveries from Boeing ( BA) to increase by almost 15% in 2012, contributing to 20% revenue growth. Further ahead, it projects a 9% growth in deliveries in 2013.

Based on average estimates of analysts polled by Bloomberg, these five stocks have potential upsides ranging from 12% to 24%, with average buy and average hold ratings of 67% and 29%, respectively.

These stocks are listed in ascending order of upside potential.

5. The Boeing Company ( BA), builds and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight technology and launch systems and services. The company also provides numerous military and commercial airline support services.

For the third quarter of fiscal year 2011, Boeing reported revenue of $17.72 billion, up 4%, compared to the third quarter of 2010, and backlog grew 2.8% sequentially to $332 billion, which includes $26 billion in orders during the third quarter alone.

Boeing recorded third quarter net income of $1.1 billion or $1.46 per diluted share, up 31% compared to net income of $837 million or $1.12 per diluted share during the third quarter of 2010.

For the year 2011 Boeing has increased its earnings per share guidance in the range $4.30 to $4.40 per share.

In December 2011, FedEx ( FDX) signed an agreement with Boeing to purchase 27 new 767-300F aircraft, with three arriving in fiscal 2014 and six per year in fiscal 2015 through 2018. Furthermore, the company declared a quarterly dividend of 44 cents per share, an increase of 5% from the previous regular quarterly dividend, payable March 2.

Of the 33 analysts covering the stock, 76% recommend a buy and 21% suggest a hold. The stock's average 12-month price target is $81.95, or 11.7% above the current price, according to a Bloomberg consensus.

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