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General Dynamics Corporation (GD): A Bull Case Theory

We came across a bullish thesis on General Dynamics Corporation (GD) on ValueInvestorsClub by jagger. In this article we will summarize the bulls’ thesis on GD. General Dynamics Corporation shares were trading at $288.22 when this thesis was published, vs. closing price of $302.4 as of Sept 10.

Photo by NASA on Unsplash

General Dynamics, a prominent global aerospace and defense company with an $80 billion market cap and $89 billion enterprise value, stands out with its diverse and leading market franchises. Founded in 1952 and headquartered in Reston, VA, the company operates worldwide and is renowned for its strong business and M&A track record. With 2023 revenues of $42.3 billion, net income of $3.3 billion, and free cash flow (FCF) of $3.8 billion, GD maintains a solid financial foundation with a leverage ratio of approximately 1.5x net debt to EBITDA.

The investment thesis for General Dynamics centers on three pivotal aspects. Firstly, the strength of its Gulfstream business is a significant asset. Gulfstream’s robust product portfolio, healthy backlog of $21 billion, and recent new model introductions position it as a leader in the business jet market. The G700, G800, and G400 jets, with FAA certification and initial deliveries underway, are expected to boost profitability despite earlier margin concerns. The business jet market remains resilient, with Gulfstream well-positioned to capitalize on continued demand.

Secondly, GD’s defense business aligns closely with Department of Defense (DoD) priorities, addressing critical areas such as munitions replenishment, naval capabilities, and cyber threats. The Marine Systems unit, with a $44 billion backlog, is poised for long-term growth due to increased investment needs in U.S. Navy shipbuilding. Combat Systems and Technologies also present attractive opportunities, supported by a combined backlog of $58 billion. The company’s defense offerings are well-positioned to benefit from ongoing geopolitical tensions and rising defense budgets.

Lastly, GD’s capital deployment strategy enhances EPS growth. With FCF conversion exceeding 100% in recent years, GD is well-positioned for continued high single-digit dividend increases and substantial share repurchases. The company’s recent repurchase of 390,000 shares demonstrates its commitment to returning capital to shareholders. Over the past decade, GD has repurchased an average of 3.5% of shares annually, indicating a strong focus on shareholder value.

General Dynamics operates across four main segments: Aerospace, Marine Systems, Combat Systems, and Technologies. Its diversified portfolio includes leading products and services in business aviation, shipbuilding, land combat vehicles, and advanced technology solutions. The company’s valuation appears reasonable, trading at a 14x EBITDA multiple, 18x earnings, and a 5.6% FCF yield. With expected EPS growth in the low to mid-teens and favorable industry tailwinds, GD is positioned for steady long-term growth. Despite some risks, including supply chain challenges and potential macroeconomic downturns, GD’s solid fundamentals and strategic focus make it a compelling investment opportunity.

General Dynamics Corporation is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held GD at the end of the second quarter which was 54 in the previous quarter. While we acknowledge the potential of GD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as GD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and 10 Best of Breed Stocks to Buy For The Third Quarter of 2024 According to Bank of America.

Disclosure: None. This article was originally published at Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

“The future of AI depends on an energy breakthrough.”

Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

And that’s where the real opportunity lies…

One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.

As demand from AI data centers explodes, this company is gearing up to profit from the most valuable commodity in the digital age: electricity.

The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
  • It’s one of the only global companies capable of executing large-scale, complex EPC (engineering, procurement, and construction) projects across oil, gas, renewable fuels, and industrial infrastructure.
  • It plays a pivotal role in U.S. LNG exportation—a sector about to explode under President Trump’s renewed “America First” energy doctrine.

Trump has made it clear: Europe and U.S. allies must buy American LNG.

And our company sits in the toll booth—collecting fees on every drop exported.

But that’s not all…

As Trump’s proposed tariffs push American manufacturers to bring their operations back home, this company will be first in line to rebuild, retrofit, and reengineer those facilities.

AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.

While the world is distracted by flashy AI tickers, a few smart investors are quietly scooping up shares of the one company powering it all from behind the scenes.

AI needs energy. Energy needs infrastructure.

And infrastructure needs a builder with experience, scale, and execution.

This company has its finger in every pie—and Wall Street is just starting to notice.

Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.

While most energy and utility firms are buried under mountains of debt and coughing up hefty interest payments just to appease bondholders…

This company is completely debt-free.

In fact, it’s sitting on a war chest of cash—equal to nearly one-third of its entire market cap.

It also owns a huge equity stake in another red-hot AI play, giving investors indirect exposure to multiple AI growth engines without paying a premium.

And here’s what the smart money has started whispering…

The Hedge Fund Secret That’s Starting to Leak Out

This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits.

They’re sharing it quietly, away from the cameras, to rooms full of ultra-wealthy clients.

Why? Because excluding cash and investments, this company is trading at less than 7 times earnings.

And that’s for a business tied to:

  • The AI infrastructure supercycle
  • The onshoring boom driven by Trump-era tariffs
  • A surge in U.S. LNG exports
  • And a unique footprint in nuclear energy—the future of clean, reliable power

You simply won’t find another AI and energy stock this cheap… with this much upside.

This isn’t a hype stock. It’s not riding on hope.

It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

The future is powered by artificial intelligence, and the time to invest is NOW.

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A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…