Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

FLIR Systems, Inc. (FLIR), Gencorp Inc (GY), CAE, Inc. (USA) (CAE): Defense Contractors You May Have Missed


Canadian CAE, Inc. (USA) (NYSE:CAE) is involved in training and services for civil and military employees, as well as the production of simulation products for both end markets. The company’s growth engine appears to be in civil training, where it is inking contracts with the likes of LAN, TAM, and numerous other overseas airlines, as well as GE Capital Aviation Services and Ryannair. Unfortunately, though, margins are under pressure. This might be partly due to the need to integrate its recent acquisition of Oxford Aviation Academy Luxembourg.

Elsewhere, the civil product market is trending positively. CAE, Inc. (USA) (NYSE:CAE) may be up against some restraints from defense budget reductions in its military businesses. In all, it is probably positioned to perform better after the current quarter, when profitability of the civil training business is improved.

Thus, at its recent price quote, CAE, Inc. (USA) (NYSE:CAE) shares offer an opportunity for upside. Analyst estimates and projections could prove conservative as the company continues to enter new deals and possibly further acquisitions. Otherwise, additional setbacks in the civil training unit may take a toll on results.

In closing

Now may not seem the ideal time to invest in military suppliers, as budget cuts are hampering results for many. Nevertheless, these niche players have positive momentum on their side. Investments in profitable business lines can be a boon to companies’ bottom lines, as may be the catalysts for FLIR Systems, Inc. (NASDAQ:FLIR) and CAE, Inc. (USA) (NYSE:CAE). All three here would benefit from cost containment activity, given their positive revenue trends and narrowing margins. Such improvements might help to lift their stocks further over the course of this year and beyond.

Damon Churchwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Defense Contractors You May Have Missed originally appeared on

Damon is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.