The Good, the Bad, and the Ugly of Defense Stocks: Raytheon Company (RTN), Lockheed Martin Corporation (LMT)

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Now for the actionable intel. Raytheon Company (NYSE:RTN) is the company best suited to weather a reduction in defense spending, and the stock should be ripe for the picking by March as long as negative sentiment towards defense stocks persists. The company operates in six business segments, all of which are focused on defensive weapons systems, early threat detection, communications, and information technology and services. Raytheon is heavily incorporated in the current national defense structure holding contracts with various government organizations ranging from the Department of Justice, Department of Defense, and Homeland Security.

Raytheon is largely focused on the information technology and services segment of its business model and will likely benefit from this position in the future.  Overall, the company relies on the U.S. Government for 75% of its net revenue. Raytheon currently holds 15,000 active contracts, however none of which account for more than 5% of total net revenue, which should help to insulate the company when the red ink begins to fly in Washington.

The article The Good, the Bad, and the Ugly of Defense Stocks originally appeared on Fool.com and is written by Brian Jordan.

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