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Alex RuusGeneral Dynamics Corp.GDHOLDSep 05, 2018

How to analyze this company? GD is a complex company, but look at the industry: What are threats from new competition? Disruption from the consumer side? How is it successful in their industry? Who are the sector leader(s)? What is the relative valuation? GD is a global leader in military aerospace. They own Gulf Stream (which competes with Bombardier). U.S. defense stocks have done very well and have run up, so he would hold most of them now. So, buy them on a pullback.

Alex Ruus

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$193.98

Stock price when the opinion was issued

$359.53

As of Jun 15, 2026. Market Open.

transportation equip & components

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COMMENT

Hitting a new high today. Their marine segment was strong.

SELL

Not sure of the negative impetus for the recent pullback. Underperforming the industrial sector when the market's going up -- not a good sign. Question why you're there. Could see further weakness.

HOLD

Really strong move after its pullback. He'd look to see where the 200-day MA is ($272). Looks a bit parabolic, that should make you nervous. Momentum indicators might show it a little overbought, a pullback would not surprise him.

Might be at the start of a consolidation, so might pause for a bit. Overall, you can't argue with the chart, so it's not over till it's over.

BUY

Likes the CEO and shares are not expensive, PE-wise.

BUY

Global company with wide presence. Geopolitical risk a good aspect for business. US defensive spending rising. Tailwinds for business do not appear to be letting up. Has consistently beat earnings estimates. Fundamentals score 10/10. Would recommend buying.

PAST TOP PICK

(A Top Pick Feb 09/22, Up 10%)

Industrials are doing well and unfortunately there is a tailwind for defense stocks. With the submarine part it has a strong order book.

COMMENT

Raytheon vs. General Dynamics When analyzing a company, look at its peers as well. In this case, Raytheon offers a buffer to only the defence business--commercial aerospace. Two-thirds of revenues come from commercial, the rest in defence. The former is a great opportunity because more planes will be produced as the economy improves. Meanwhile, defence offers stability. Prefers Raytheon.

BUY

Was one of top picks a few weeks ago. There is a great demand for its products such as making systems for submarines and combat systems for some European allies. It is inflation protected since the contracts are cost plus. Own it for the long term.

TOP PICK

4 areas: tech, marine systems, aerospace, combat systems. Marine systems segment provided main growth right now. Most of their contracts are cost+, which gives them built-in inflation protection if costs go up. Demand by wealthy for private air travel. US won't cut military spending anytime soon. Yield is 2.21%, has grown at 10% a year for the last 5 years and likely to continue. (Analysts’ price target is $234.24)

BUY

It trades in line with peers at a reasonable 15x PE. Their cyber-defence division makes up a serious slice of its revenues. He likes this. The defence budget under Biden is still growing but not as quickly as before. That said, the defence industry will always see growth, but it's a matter of how fast or slow. Looking ahead, defence in general will focus on cyberattacks.

BUY

A defensive company that has made an acquisition in the cyber defence business. Future wars will be won and lost in this platform. Trades at 15x earnings. A good entry into this. Highly acquisitive.

BUY

GD vs. LMT vs. RTX When analyzing a company, you also want to analyze its peers. This is the case with Lockheed Martin. Instead, look at General Dynamics. They acquired CSRA, entrenched in cyber defense, and this is where corporate and government money will be invested. Also see Raytheon, a hybrid of a commercial application with a defense contractor. RTX has great promise, undervalued, considerable cashflow in the future.

BUY

Lockheed-Martin? In this space, he prefers the cheaper GD in 2018 bought CSRA which is in cyberdefence and A.I. Now, it's a little depressed because of the commercial side, but it has a lot of potential.

DON'T BUY

An interesting space. Up this month. Something like Lockheed Martin might be less expensive. GD hasn't performed as well as Lockheed or Raytheon, so he likes those names a bit more.

DON'T BUY

Raytheon has been the winner in defence this year. GD, though, has no growth; their backlog fell in the last quarter. But aerospace revenues were up and they improved their margin. Combat systems revenue was up 14%. IT down 11%. Guidance hasn't changed vs. peers who expect the government to increase spending. Ethically, he isn't in this sector--he doesn't want to own arms and weapons. GD is in the middle of the pack.

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Alex RuusGeneral Dynamics Corp.GDHOLDSep 05, 2018

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