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.

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Companies

Symbol Name Price Change % Volume
LMT Lockheed Martin Corporation 269.45 -1.69 -0.62 1,004,174 Trade
RTN Raytheon Company 155.21 -1.05 -0.67 1,610,022 Trade
ESLT Elbit Systems Ltd. 118.79 -0.29 -0.24 15,454 Trade
TGA.R:CA TransGlobe Apartment Real Estate Investment Trust n/a n/a n/a 0
NOC Northrop Grumman Corporation 245.96 -2.44 -0.98 856,368 Trade
ATRO Astronics Corporation 32.51 0.18 0.56 124,045 Trade
SWHC Smith & Wesson Holding Corporation n/a n/a n/a n/a
RGR Sturm Ruger & Company Inc. 60.45 1.00 1.68 553,371 Trade

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