General Dynamics Corp (NYSE:GD)

Morningstar wide moat focus index recently added this to the index.

Every single metric for this company seems to scream 'over valued'

Waiting on that catalyst...

Recent certification of two Gulfstream aircraft that are back ordered for years to come. Other branches of General Dynamics all functioning well.

Defense industry all day long;
Plus GD's design for the LCS is going to be used in the Pacific theater as the Navy moves to the Pacific. Looks to be profitable.

supporting the jsf alone will reap windfall profits. as a former naval aviator, i can tell u, the price of supporting our defense networks will continue to increase. and inflationary spending goes through the military first, making it safety net alpha, and it's a great dividend stock.

sidenote: for those of you concerned with china's military rise- to be sure, china can get new hardware in the water/to the flightline in a heartbeat. what they cant do in a heartbeat is develop and manage the defense network that gives life to their exanse of hardware as a single entity. the US is about 70 yrs ahead of them in that respect.

Buffet.

Defense spending...while getting a good amount of revenue from non-gov't sources. Will prob make 2-2.5%.

War with Iran

12/10

Here's a fool.com piece I wrote about General Dynamics:

http://www.fool.com/investing/general/2011/11/26/the-hidden-dividend-stock-that-buffett-just-bought.aspx?source=itxsitmot0000001&lidx=3

The Hidden Dividend Stock That Berkshire Just Bought
Brendan Byrnes
November 26, 2011

Warren Buffett, the so-called Oracle of Omaha, knows a thing or two about investing. That's why it was huge news when Buffett announced last week that his company, Berkshire Hathaway (NYSE: BRK-B ) , had purchased a total of 5.5% of IBM (NYSE: IBM ) , an investment worth $10.7 billion.

The headlines were predictable. "Buffett Changes His Philosophy, Buys Tech Stock." "Should You Follow Buffett into IBM?"

But lost in the IBM shuffle were Berkshire's other (albeit smaller) moves. Berkshire also opened new positions in several companies, including Intel (Nasdaq: INTC ) , and Visa (NYSE: V ) . Berkshire purchased 9.3 million Intel shares valued at $199 million and 2.29 million shares of Visa worth $196 million.

However, another such "small" move by Buffett's firm has me the most excited. That's because it's a solid company with a strong dividend. Which Berkshire pick am I putting a bullish CAPScall on today?

Boom!
That'd be General Dynamics (NYSE: GD ) . Berkshire has purchased 3.1 million shares of General Dynamics since March for $174 million. General Dynamics is a well-established defense contractor that's been around since 1899 and pays a solid (and steady) 2.9% dividend. GD is also cheap -- it's currently trading at less than 9 times earnings. Why is that?

Over the past year, GD was beating the S&P 500 before summer began. However, after May, GD trails the S&P fairly substantially and winds up down about 7% so far this year versus the S&P.

It looks as if the market has beaten GD and other defense contractors down because of the possibility of defense cuts. That's been a worry for owners of these stocks for a while, but this summer was when the talk about cutting defense spending really started to heat up. Coincidentally, that's exactly where GD opens a prolonged negative spread against the S&P.

You're nuts!
You might be calling me crazy for giving a defense contractor a thumbs-up right now, especially after the epic (though not unexpected) failure of the congressional "supercommittee" to reach a long-term debt deal triggered up to $600 billion in further defense cuts over 10 years, beginning in 2013.

Time to invoke more Buffett. This time a vintage quote from the man himself: "Be fearful when others are greedy, and greedy when others are fearful."

I believe that the debt crisis and subsequent decline in GD's stock price has created an opportunity for investors to buy GD for cheaper than they otherwise could.

Sure, about 72% of GD's 2010 revenues came from the U.S. government. And that might be a scary stat given the current political climate. But once you compare that number with those of GD's competitors, it gets a little bit more palatable.

Lockheed Martin (NYSE: LMT ) , the world's biggest defense contractor, received 84% of its 2010 revenues from the U.S. government. And Northrop Grumman (NYSE: NOC ) had the U.S. government account for a whopping 92% of its 2010 revenues.

So even though GD does get the majority of its revenues from the government, it is better diversified than many of its big defense-contractor competitors, mainly because of its successful Gulfstream business jet segment.

GD also has many of its defense contracts in areas that are assumed to be less likely to be cut. Through its Electric Boat segment, GD has been the primary builder of submarines for the U.S. Navy for more than 100 years. The company continues to churn out subs at a steady pace, with marine systems accounting for a total of $3.6 billion in revenue for the company in 2010.

Luckily for GD, when you're the No. 1 maker of submarines, you get paid to fix them as well. To that end, GD was recently awarded an additional $429 million as part of a $1.2 billion contract for nuclear-sub support work. It pays to be No. 1.

Foolish bottom line
I believe that fears over defense cuts are overblown, especially for a company like GD. America will always spend whatever it takes to defend itself. Count me among those who don't think we'll see $600 billion cut from defense spending. Moreover, GD is a rock-solid dividend stock with a long track record. Don't expect a 10-bagger here, but trading at less than 9 times earnings, this stock is oversold -- and that's why I'm giving it a thumbs-up in My CAPS portfolio today.

Military-Industrial Complex.

Ted Combs from Omaha also bought a few shares ;-)

Buffet @3.064 million shares worth $174.3 million.

Slight overperform. Rock-solid company, looks to be underpriced while outperforming its peers financially.

Strong IP, Contracts in a down defense market.

Defense is the only segment of government that is budgeted to _grow_ by 5% next year. As if!
1) With Al Qaeda gone and the middle east taking care of itself, there are no major opponent except the Chinese, and the problem there is our deficit not our armaments. The N Koreans are too crazy to factor in.
2) Who's going to buy our weapons? The Euro is in a mess, and the middle east has other things on its plate besides nation-state affairs. Israel should expect less US aid. Japan remains fiscally weak. Emerging nations have their own fiscal problems.
3) US election is coming up again. People are starting to hate on the tea partiers, but more budget cutting is needed to right the ship. Everything else is already cut to painful levels... what's left? Defense.

Winning lots of contracts. However, I worry about the long-term sustainability of these government contractors...

Good balance sheet.
Low P/E.