The Boeing Company (BA), Northrop Grumman Corporation (NOC), General Dynamics Corporation (GD): Perpetual War Is Coming, Are You Ready to Profit?

The company’s total debt to equity ratio of 0.42 is significantly less than Boeing’s, but Northrop Grumman Corporation (NYSE:NOC) is a much smaller company and very dependent on the U.S. government. In the next couple years, its ROI of 14.6% and profit margin of 7.8% could take a hit as the Pentagon cuts back on a number of programs. Regardless, Northrop Grumman Corporation (NYSE:NOC)’s presence in important programs like the X-47 shows that the company is well-suited to take advantage of the coming drone wars.

General Dynamics Corporation (NYSE:GD) is working on a number of drone programs. It is trying to help the Pentagon save on its labor costs. Through the unmanned autonomous collaborative operations program, the company is trying to make a system where a single operator can control multiple unmanned systems. This system would decrease the number of men required to operate a drone fleet and help make the U.S. military more efficient.

In the long run, General Dynamics Corporation (NYSE:GD) is good contractor to watch. Its debt load is manageable with a total debt to equity ratio of 0.34. Its short run situation looks a little more challenging. Its earnings before interest and taxes (EBIT) margin of 2.2% and profit margin of -1.0% are suffering and government cuts will not help the situation.

Conclusion

The U.S. has set a new precedent by engaging in a massive worldwide drone war with only vague congressional approval. The legalities of the situation are a mess, but it is clear that the world is moving toward new system of perpetual war where the frequent shooting down enemy drones is considered a somewhat ordinary occurrence.

Northrop Grumman Corporation (NYSE:NOC) is one of the best companies to watch as its X-47 drone will provide a major advancement for the U.S. Navy. The Boeing Company (NYSE:BA) and General Dynamics Corporation (NYSE:GD) don’t get as much press coverage, but they deserve a place on your watch list. As the Pentagon announces new to programs to try and develop more cost effective and autonomous UAVs, these companies will try and gain a piece of the pie.

The article Perpetual War Is Coming, Are You Ready to Profit? originally appeared on Fool.com and is written by Joshua Bondy.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool owns shares of General Dynamics and Northrop Grumman. Joshua 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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