Mr. Ruttenbur: Security and defense. I cover the large prime contractors on the defense side, which would be L-3, Lockheed Martin, General Dynamics , Northrop and Raytheon. I also cover a smaller-cap name on defense, AeroVironment. I cover several companies that are both security and defense plays, for example, American Science & Engineering, FLIR, OSI Systems or even ICx Technologies. Although those companies are in the security side, 30% to 50% of their revenue is defense related.
TWST: Has the U.S. situation with Iraq and now Afghanistan helped this sector?
Mr. Ruttenbur: The defense companies are sitting extremely well right now. They have just come off nine years of tremendous growth, they all have great balance sheets, and they all have been buying back their own stock and are sitting on a ton of cash. With the projections going from 30,000 troops in Afghanistan at the beginning of 2009 to 100,000 over the next six months, Afghanistan is going to grow while Iraq is going down in terms of the number of troops. So overall funding and appropriations are going up for the defense group, which is a positive.
Tickers included in this excerpt: ASEI, AVAV, FLIR, GD, ICXT, LLL, LMT, NOC, OSIS, RTN
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.