Raytheon (RTX)

(Market Call Minute.) If you can get your head around the ethical component of holding defence and securities like that, it has great price momentum, great volatility and valuation is reasonable.

Raytheon (RTN-N) or General Dynamics (GD-N)? In defence, spending is expected to decrease, not increase. Most of the growth is expected to come from outside of the US. This company looks slightly more attractive, because they have more exposure to international growth.

Defence spending has slowly been on the decline, but depending on who is elected in November, defence spending could actually go up. Defence stocks have held in really well, and tend to be very strong cash flow generators. Not inexpensive, so she is not inclined to buy at this point. A slower growth industry.

This has been a great stock and has done very well. Trading at about 18X earnings. Starting to get a little bit rich. He prefers General Dynamics (GD-N) which has stronger valuations.

A typical defence stock, and the kind that normally does very well from October to May of each year. Technically it has just broken through new highs which is encouraging. When stocks get close to the end of their seasonal strength, such as this one, he would stick with it as long as it is outperforming the market and has an upward trend.

What you need to do is think about what are the fundamental drivers of defence companies. These companies have had phenomenal runs. They are not inexpensive, but at the same time he doesn’t see anything that is holding them back right now. There is every reason to believe this can continue on a similar trajectory.

(Market Call Minute) They will probably do better in a defence spending market that we will probably see over the next couple of years.

Defense does stand out for him. This group has leadership in this market.

Precision Castparts (PCP-N) or Raytheon (RTN-N). Which would be better for getting into the US military defence sector? Precision Castparts is more focused on commercial jetliners while this is more about military systems. We are at a point in the cycle where the US is likely going to have to increase their spending on defence, and it is fairly early in the cycle for this group. Because of this, he would prefer to own this one. 82% of this company’s revenues come from the US government. Dividend yield of 2.3% and there will be good dividend growth on it.

This does well in the environments that we are in. Chart shows a long-term upward trend from 2012. It may start to roll over a little. Doesn’t think you can get this a heck of a lot cheaper. If you are looking out for the couple of years, you can probably buy it and not worry about it.

For long-term investing are you better off with Raytheon (RTN-N) or United Technologies (UTX-N)? These both have the same kind of exposure with a lot of defence industry exposure. The problem with the defence industry is that has it has been either a feast or famine, and he wouldn’t know which one would get hurt the most if a contract got cancelled.

Raytheon (RTN-N) or United Technologies (UTX-N)? This is mainly US defence, and there are budgetary constraints. The company has generally done quite well, and generates a lot of cash flow. Pays an attractive dividend. United Technologies has a portion of their business that is close to US defence, and have Pratt (engines), Otis elevators, etc. Much more diversified. Her preference would be United Technologies.