Textron Inc. (TXT), Lockheed Martin Corporation (LMT), Raytheon Company (RTN): Are These 3 Aerospace & Defense Stocks a Buy?

Raytheon Company (NYSE:RTN) recently announced a reorganization plan to help cut costs. It will consolidate to four business units from the five it previously maintained and cut 200 jobs to save approximately $85 million.

Time to buy

While the government budget cuts will impact all of these stocks, many people think these companies have overstated the potential impact of the budget cuts. Textron Inc. (NYSE:TXT), unlike the other two companies, only received 29% of its 2012 revenue from government spending. While this is a significant amount, the other companies are almost solely reliant on government spending. Textron Inc. (NYSE:TXT) has addressed the issues that hurt the most recent quarter and seems to be positioning well for long-term growth.

Lockheed Martin Corporation (NYSE:LMT) is the industry leader and should have no trouble growing international revenue. The company should weather the cuts well and will also pay you to wait with a current dividend yield of 4.4%.  Even if revenue drops by the anticipated 2%, there should be no risk of a dividend cut.

Raytheon Company (NYSE:RTN) has estimated the largest potential decline due to spending cuts, but it could be overstating the true risk. The company is cutting costs and seems committed to handling the revenue declines to mitigate a decrease in profitability.  The dividend yield of 3.3% will also entice investors to stick with the stock.

All three stocks deserve a close look if you think that further government spending cuts can be avoided. If the current cuts are priced in, there is upside potential due to the overstated spending-cut impact.

The article Are These 3 Aerospace & Defense Stocks a Buy? originally appeared on Fool.com.

John Timmes has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin, Raytheon Company, and Textron. John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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