Thursday, September 27th, 2007
Defense Contractors See No Sector Slowdown on the Horizon
By Jason Simpkins
Staff Writer
A number of defense-industry shares hit new highs yesterday (Wednesday), and may have more room to run, according to a report by the Associated Press. Much of the surge can be attributed to Defense Secretary Robert Gates, who requested and additional $42 billion in funding from Congress to cover expenditures in Iraq and Afghanistan.
The AMEX Defense Index, which tracks the performance of 14 major defense companies, jumped 14.25% in afternoon trading. Since last year the index has climbed 47% while the S&P 500 has only picked up 15%.
Shares of Lockheed Martin (LMT) topped the gainers, climbing 76 cents to close at $105.72. The stock is nearing its all-time high of $107.33, established in July. In the past year, prices have traded as low as $82.70.
Shares of Raytheon (RTN) also collected 75 cents yesterday, closing at $64.47 – and trading as high as $64.51.
According to The AP, CIBC World Market Corp. analyst Myles Walton believes defense spending will remain high in the coming years. In a recent note to clients, he said that the Pentagon is unlikely to experience a reduction in spending in the fiscal 2009 budget, and that the fiscal 2010 budget would be the first opportunity for any drawback in war-related spending. In that case, contractors and financials wouldn’t be affected until at least 2011.
Profits Are Up 1,056.2% for This Wisconsin Company
Commodities are on a tear - and so is mining equipment. This "pick-and-shovel" company has already sold out two-thirds of its equipment for 2008. Australia, Canada and China are battling for orders. And the Street hasn't figured it out yet. All the details are in our Power Plays Report.
