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War On Terror Stocks

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Why War On Terror Stocks Are Good Investments

SoldiersInvestors cannot ignore that fact that certain war on terror stocks will see a boost in revenues and earnings, as governments and private entities boost their spending considerably on anti-terrorism efforts.   There are certain companies connected to the defense and security industries that have been the beneficiaries of dramatically increased spending to combat the growing terror menace, and will continue to see revenues increase, as the war on terror is likely to be a prolonged battle. Many are familiar names from the defense industry. Added to these familiar names are cyber-security firms and other firms that provide intelligence and logistics for the troops fighting the war on terror and to decision makers. Revenues for these firms are only going to increase from both public and private sources, as the threat and concern over terrorism grows over time.

Big Cap War On Terror Stocks

SAICScience Applications International Corporation (NYSE: SAIC) is one of the key companies that provides the tools that the United States government needs to collect intelligence on terrorist organizations and realistically assess the threat posed by various terrorist groups. Science Applications International Corporation is not a well known company, but is worth investigating as an investment.

While defense contractors are usually thought of as companies that provide big military hardware to the United States military, many have shifted their businesses to cater to the growing need for the government to respond to terrorist organizations and threats.   Two defense contractors appear to be well positioned to provide the United States government equipment, supplies and services to fight the war on terror. These include Raytheon (NYSE: RTN) and Northrop Grumman (NYSE: NOC). The reason why is because these two defense contractors provide equipment and logistical support that the United States military and other government agencies use to prosecute the war on terror.

Raytheon has recently been awarded contracts from government agencies for equipment needed to fight the war on terror. For example, Raytheon won an $11 million contract that was awarded by the Office of Naval Research to develop laser equipment that can detect and shoot down low-flying aircraft, such as small planes and drones. Raytheon’s Patriot Air and Missile Defense System continues to receive government funding, with a renewed emphasis to fight against terrorism in areas around the world in which United States troops are located.

Raytheon looks interesting for a valuation point of view since it is trading 13 times 2015 estimated earnings per share of $7.76.   Raytheon has an estimated earnings growth of approximately 11%, which is rather healthy.

Northrop Grumman

Northrop Grumman is in the thick of the war on terror, as the company provides government intelligence, communications, battle management, surveillance, reconnaissance, and strike operations support for war on terror operations. The company also provides manned and unmanned aircraft that are utilized by the military and government agencies to collect information and advance strategic interests. Northrop Grumman is involved in cybersecurity and processing intelligence data collected as part of the war on terror.

As an indication of just how big the war on terror is for Northrop Grumman and other defense contractors, in August 2014, Northrop Grumman and four other companies were awarded a contract by the United States Navy that involves upgrading cybersecurity, command and control systems, and communications and intelligence systems. The contract is worth $2.5 billion over eight years.

Northrop Grumman also looks interesting for a valuation point of view. The company trade is trading about 15 times 2015 estimated earnings of $10 per share.

Other companies to look at when looking for investments in war on terror stocks include:

  • Booz Allen Hamilton Holding Corporation (NYSE: BAH) is a consulting company that provides mission operations, technology, and engineering.
  • BAE Systems PLC (OTC Pink: BAESY) is a defense, aerospace, and security company that is based in the United Kingdom and offers services to western governments, including the United States.
  • Lockheed Martin Corporation (NYSE: LMT) is another large defense contractor that stands to benefit from increased spending on war on terror.

Small Cap War On Terror Stocks

For investors that would rather focus on small capitalization stocks to invest in war on terror stocks, consider investing in the following small capitalization stocks that are providing the government products and services to fight the war on terror.

  • AeroVironment, Inc. (NASDAQ: AVAV) is a maker of drones that are used to collect intelligence information and fight terrorists. The company is involved in the design, development, manufacturing, support, and operation of unmanned aircraft systems (drones) and tactical missile systems.
  • DigitalGlobe, Inc. (NYSE: DGI) provides imagery and imagery information products and services that the United States military uses for strategic planning purposes for war on terror missions in remote areas.

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