10 Best Defense Stocks To Watch Right Now

10 Best Defense Stocks To Watch Right Now: Raytheon Company(RTN)

Raytheon Company, together with its subsidiaries, provides electronics, mission systems integration, and other capabilities in the areas of sensing, effects, and command, control, communications, and intelligence systems, as well as mission support services in the United States and internationally. It operates in six segments: Integrated Defense Systems, Intelligence and Information Systems, Missile Systems, Network Centric Systems, Space and Airborne Systems, and Technical Services. The Integrated Defense Systems segment provides integrated naval, air, and missile defense and civil security response solutions. The Intelligence and Information Systems segment offers intelligence, surveillance and reconnaissance, advanced cyber solutions, weather and environmental solutions, and information-based solutions for law enforcement and homeland security. The Missile Systems segment develops and produces weapon systems, including missiles, smart munitions, close-in weapon systems, projectiles, kinetic kill vehicles, and directed energy effectors for the armed forces of the U.S. and other allied nations. The Network Centric Systems segment provides net-centric mission solutions, including integrated communications systems, command and control systems, combat systems, and operations and precision components for the U.S. federal, state, and local government customers, as well as civil customers. The Space and Airborne Systems segment designs and develops integrated systems and solutions for missions, including intelligence, surveillance, and reconnaissance; precision engagement; unmanned aerial operations; and space. The Technical Services segment provides training, logistics, engineering, product support, and operational support services for the mission support, homeland security, space, civil aviation, counterproliferation, and counterterrorism markets. Raytheon Company was founded in 1922 and is based in Waltham, Massachusetts.

! Advisors' Opinion:

• [By Rich Smith]

  The U.S. Department of Defense awarded Raytheon (NYSE: RTN  ) a pair of contracts Wednesday -- one big, one small.

  The big one -- in fact, the biggest contract the Pentagon awarded to anyone Wednesday -- is worth $83.8 million to Raytheon. A sole-source, cost-plus-incentive-fee, and cost-plus-fixed-fee foreign military sales contract modification, it hires Raytheon to perform software updates, radar repairs, logistics, and other work on AN/TPY-2 radars being provided to the government of the United Arab Emirates for use as part of Lockheed Martin's (NYSE: LMT  ) new Terminal High Altitude Area Defense, or THAAD, system.

• [By Vinay Singh] company also provides various security solutions in the United States and internationally.

  It has $12.39 per share in cash and a current ratio of 1.57; the company is liquid. Analysts expect $5.44 in EPS for the next fiscal year, and the current stock price is less than 10 times that figure, compared to a peer average of 17 times, suggesting Raytheon is significantly undervalued.

  It has an impressive EBITDA margin in the mid-teens and an operating cash flow margin in the mid single digits. It reported strong operating cash flow from continuing operations at $1.0 billion in the fourth quarter and $2.0 billion for the entire year.

  Backed by the strong free cash flow, the company should be able to further increase its cash reserve by $7.5 per share next year. ** Also, the share count has fallen from 425 million in fiscal 2008 to less than 330 million at the end of 2012, and considering the management's plans on buybacks, this trend should continue.

  Like L-3 Communications, Raytheon faces revenue declines from defense spending cuts. Nevertheless, I think Raytheon can grow its free cash flow at a 2-5% rate for the long-term. Discounting that back, it suggests a fair value of about $66.

  The bottom line

  To generate safe ! and stabl! e income in a volatile market environment, investors should diversify their portfolios with different industries. With impressive cash flows and dividend yields of more than 2.5%, the aforesaid stocks in the Aerospace/Defense Industry offer investors a valuable source of regular income, as well as the potential for long-term capital appreciation.

  Currently 0.00/512345

  Rating: 0.0/5 (0 votes)

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• [By Rich Smith]

  One of the bigger winners in the race to land contracts yesterday was Raytheon (NYSE: RTN  ) , which came away with two contract wins worth a combined $58.1 million -- about 9% of the total.

source from Top Penny Stocks For 2015:http://www.seekpennystocks.com/10-best-defense-stocks-to-watch-right-now.html