General Dynamics Corporation (GD), Huntington Ingalls Industries Inc (HII): Will Sequestration Sink The Aegis Destroyer?

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Will the Navy remain mission-capable?
Ships aren’t the only area where the Navy is seeing cuts; the service was also planning on purchasing one P-8A maritime surveillance plane from The Boeing Company (NYSE:BA) , one E-2D Hawkeye battle management aircraft and two unmanned Fire Scout helicopters from Northrop Grumman Corporation (NYSE:NOC) , and one F-35C carrier fighter from Lockheed Martin Corporation (NYSE:LMT) — all of which face being cut.

Clearly, this is all bad news for defense contractors. It’s also bad news for the Navy, as it relies on these systems to remain mission-ready.

What now?
What’ll happen to the Aegis Destroyer contract remains to be seen, but it’s not looking great. If it does get cut, General Dynamics Corporation (NYSE:GD) and Huntington Ingalls Industries Inc (NYSE:HII) could see their stocks suffer. On the other hand, that might end up being a great time to load up on defense stocks at a discounted rate. Yes, sequestration is hurting defense, and contracts are being cut, but as I’ve said before, defense contractors are essential to the military. Consequently, while defense contractors may be hampered in the short term, in the long term I’m not too worried.

The article Will Sequestration Sink General Dynamics’ Aegis Destroyer? originally appeared on

Fool contributor Katie Spence owns shares of Northrop Grumman. Follow her on Twitter: @TMFKSpence. The Motley Fool owns shares of General Dynamics, Huntington Ingalls Industries, Lockheed Martin, and Northrop Grumman.

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