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“Dynamic” Play in Defense
08/11/2014 8:00 am EST
I urge you to hold onto your defense industry stocks, asserts Jim Powell, editor of Global Changes & Opportunities Report; here, he adds a another defense play to his buy list.
Washington’s pivot to Asia to counter China and (unofficially) the new militarism in Japan, will require many new ships and aircraft. The most likely company to supply the necessary equipment is General Dynamics (GD).
The competitive edge that General Dynamics has over other defense contractors is its naval capabilities.
Its Marine Systems group builds submarines and surface vessels of every type. I think GD will be the leading supplier of the vessels needed to expand Washington’s presence in the western Pacific.
The ultimate size of a US Navy build-up to cover Asia promises to be impressive. The effort must match a large Chinese naval expansion program that has been underway for 20 years.
Nothing less than a major effort to respond in kind would be effective. A decade of new big-ticket orders should create much higher profits for General Dynamics.
The Pentagon needs more of everything, which will result in billions of dollars in sales for General Dynamics and other US defense contractors. New orders for ships, aircraft, and drones look especially promising.
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