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Opinions John Stephenson
General Dynamics Corp.GDCOMMENTAug 03, 2017
John StephensonUnknown
$199.33
Stock price when the opinion was issued
$349.90
As of Jun 18, 2026. Market Open.
transportation equip & components
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PAST TOP PICK
(A Top Pick Feb 09/22, Up 10%)
Industrials are doing well and unfortunately there is a tailwind for defense stocks. With the submarine part it has a strong order book.
David BurrowsOwned
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COMMENT
Raytheon vs. General Dynamics When analyzing a company, look at its peers as well. In this case, Raytheon offers a buffer to only the defence business--commercial aerospace. Two-thirds of revenues come from commercial, the rest in defence. The former is a great opportunity because more planes will be produced as the economy improves. Meanwhile, defence offers stability. Prefers Raytheon.
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BUY
Was one of top picks a few weeks ago. There is a great demand for its products such as making systems for submarines and combat systems for some European allies. It is inflation protected since the contracts are cost plus. Own it for the long term.
David BurrowsOwned
transportation equip & components
TOP PICK
4 areas: tech, marine systems, aerospace, combat systems. Marine systems segment provided main growth right now. Most of their contracts are cost+, which gives them built-in inflation protection if costs go up. Demand by wealthy for private air travel. US won't cut military spending anytime soon. Yield is 2.21%, has grown at 10% a year for the last 5 years and likely to continue. (Analysts’ price target is $234.24)
David BurrowsOwned
transportation equip & components
BUY
It trades in line with peers at a reasonable 15x PE. Their cyber-defence division makes up a serious slice of its revenues. He likes this. The defence budget under Biden is still growing but not as quickly as before. That said, the defence industry will always see growth, but it's a matter of how fast or slow. Looking ahead, defence in general will focus on cyberattacks.
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BUY
GD vs. LMT vs. RTX When analyzing a company, you also want to analyze its peers. This is the case with Lockheed Martin. Instead, look at General Dynamics. They acquired CSRA, entrenched in cyber defense, and this is where corporate and government money will be invested. Also see Raytheon, a hybrid of a commercial application with a defense contractor. RTX has great promise, undervalued, considerable cashflow in the future.
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DON'T BUY
An interesting space. Up this month. Something like Lockheed Martin might be less expensive. GD hasn't performed as well as Lockheed or Raytheon, so he likes those names a bit more.
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DON'T BUY
Raytheon has been the winner in defence this year. GD, though, has no growth; their backlog fell in the last quarter. But aerospace revenues were up and they improved their margin. Combat systems revenue was up 14%. IT down 11%. Guidance hasn't changed vs. peers who expect the government to increase spending. Ethically, he isn't in this sector--he doesn't want to own arms and weapons. GD is in the middle of the pack.
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BUY
GD vs. Raytheon Both are fine businesses. He owns both. GD has the business jet as well as their marine business (submarines for the US Navy); barrier to entry is strong. GD also has an IT division, a decent business. Raytheon makes missiles and well-positioned to sell to US allies; they also do electronic warfare.
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BUY
They are in defence and business jets. They're not recession-proof, but their customers are rich who will continue to buy in a recession. The price is attractive now. Trades at a low 15x forward earnings.
Christine PooleOwned
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PAST TOP PICK
(A Top Pick Apr 16/18, Down 21%) Still owns and likes it. All the defence stocks have pulled back, so this is now attractive at 14x forward earnings.They make nuclear subs for the government and a refurbishment program will last years. They also make executive Gulfstream jets.
Christine PooleOwned
transportation equip & components
A US defensive stock? To a large extent, you have missed a lot of it. They are not cheap. His choice would be this or Boeing (BA-N), which has the commercial side, but also has defence.