7 Small-Cap Defense Industry Stocks for Sequestered Times

Michael Teague |

defense, contractor, super committee, deadline, mandatory cuts, basketball, USS Carl Vinson, aircraft manufacturing, aerospaceMuch has been made of the effects of sequestration cuts that went in to effect on March 1 of this year. When it comes to national security in particular, there have been dire warnings about the dangers of across the board reductions in government spending on defense.

However, it turns out that such may not be the case for the defense industry. While the cuts will certainly affect federal employees, defense companies are doing better than ever, with industry giants such as Northrop Grumman (NOC), Raytheon (RTN), and Lockheed Martin (LMT) having fared well so far in 2013.

The following seven stocks are small-cap companies in the defense industry chosen based on positive year-to-date performance. Many of these companies have so far outperformed their much bigger peers in the industry:

GenCorp Inc. (GY) – Headquartered in Sacramento, California, GenCorp is a tech-based manufacturing company whose defense-related products include systems and components for “strategic, tactical and precision strike missiles, missile defense systems, maneuvering propulsion systems, precision warfighting systems and specialty metal products”. The company counts Boeing (BA), Lockheed Martin, Raytheon, and the Department of Defense as its biggest clients. GenCorp’s market cap is $829.61 million, with shares currently trading at $13.69, up almost 50 percent in 2013.

Astronics Corporation (ATRO) – Astronics is headquartered in East Aurora, New York, and is “a leader in advanced, high performance lighting, electrical power, avionics databus products and automated test systems for the global aerospace and defense industries”. The company’s market cap is $394.78 million, with shares trading at $27.53, up 20.32 percent so on the year so far.

Orbital Sciences Corp. (ORB) – Orbital Sciences’ primary role in the defense industry is through the development of missile interception and targeting systems. The company’s market cap is $963.98 million, with shares trading at $16.12, at a gain of 17.07 percent year-to-date.

Sturm, Ruger & Co. Inc. (RGR) – The famous, or infamous, Southport Connecticut maker of handguns and rifles has a market cap of $946 million with shares trading at $48.99. The company’s stock price has increased 8.67 percent in 2013.

Moog Inc. (MOG-A) – Also headquartered in East Aurora, New York, Moog supplies motion control technologies for navy craft, ground vehicles, and missile, radar, and energy systems. Their market cap is at the high end of the small-cap spectrum at $1.99 billion, with shares trading at $43.95, and a gain of 7.12 percent on the year.

Elbit Systems Ltd. (ESLT) – As one would expect from a good Israeli defense company, Elbit Systems is “engaged in a wide range of programs throughout the world”. Elbit works in a number of areas, including aircraft (manned and unmanned), intelligence and surveillance, naval systems, training, and homeland security. Also at the upper end of the small-cap spectrum, their market cap is $1.74 billion, with shares trading at $41.50, and a year-to-date gain of 32.62.

Smith & Wesson Holding Corporation (SWHC) – The well-known American gun manufacturer has a market cap of $551.78 million, with shares trading at $8.60, at a 1.90 percent gain for 2013.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ATRO Astronics Corporation 44.38 0.88 2.02 59,959
ESLT Elbit Systems Ltd. 95.83 -0.16 -0.17 19,249
LMT Lockheed Martin Corporation 246.25 0.72 0.29 544,430
NOC Northrop Grumman Corporation 218.30 1.30 0.60 289,527
RGR Sturm Ruger & Company Inc. 56.76 0.18 0.32 112,496
RTN Raytheon Company 139.27 0.73 0.53 444,670
SWHC Smith & Wesson Holding Corporation 25.92 0.39 1.54 1,766,678

Comments

Emerging Growth

ParcelPal Technology Inc.

ParcelPal Technology Inc is a community based delivery service. The Company through its mobile delivery app enables businesses and individuals to quickly and affordably have items delivered locally though crowd-sourced…

Private Markets

Snapchat

Snapchat is the fastest way to share a moment with friends. The mobile app, allows users to not only share photos with friends but also control how long they can…

XY Find It

Founded by serial entrepreneur Arie Trouw, XY Findables follows a single guiding principle: customers should never lose anything important again. With over 50,000 users around the world, more than 100,000…