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News Breaks
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November 8, 2009
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| 18:07 EDT |  | LLL |
| theflyonthewall.com: | L-3 could rally 30%-plus next year amid rising demand, Barron's says | | With the market rallying again, the the defense stocks have fallen out of favor. Among other things, Wall Street is worried about cuts in defense spending, and uncertainties surrounding U.S. military involvement in Afghanistan and Iraq. But L-3 Communications Holdings (LLL) could prosper despite these concerns, says Barron's. The company has a big stake in one defense category that is likely to keep growing: technology and equipment for asymmetrical warfare. That makes its shares, at $76, potentially attractive, especially as they sell for just 9.5 times 2010 estimated earnings -- a 30% discount to the group. L-3's stock could top $100 in the next year as this maker of communications, intelligence, surveillance and other defense systems, finds its expertise in growing demand. Like other defense contractors, L-3 Communications Holdings generates ample cash and pays a decent dividend. Earnings are poised to rebound in 2010, and this year L-3 could generate $10.80 a share of free cash flow. L-3 is likely to use some of its cash to make acquisitions, particularly of cybersecurity concerns. With a market capitalization of $8.9B, it could become a takeover target, too. Either way, with the stock trading at a discount, the company's shareholders seem set to win. Reference Link :theflyonthewall.com |
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