General Dynamics Corp (NYSE:GD)

CAPS Rating: 4 out of 5

The Company's business comprises of business aviation; land and expeditionary combat vehicles and systems, armaments, and munitions; shipbuilding and marine systems; and mission-critical information systems and technologies.


Player Avatar market8 (< 20) Submitted: 12/16/2011 4:48:38 PM : Outperform Start Price: $61.69 GD Score: -11.84

My recommendation for a stable cash company would be General Dynamics (NYSE: GD), which is getting negative press related to politics, but has solid long-term appeal. General Dynamics is a key military contractor and operates in segments such as tanks, munitions, submarines, military communications, and aerospace via its Gulfstream brand. I am not worried about the political hammer on defense, albeit a negative at the margin. The growth rate will remain positive even if the slope flattens out on budget cutbacks. With this company you get very stable cash flows, but my favorite part of the company is the upside the Gulfstream brand provides. Time is a critical resource for the super wealthy and business jets should have strong global demand going forward as the rising elite seek to maximize the one resource they can’t buy more of. The valuation story is compelling with a FCF yield of 10%, twice the level of Comcast and a price-to-earnings ratio of 9x

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