Needless to say, a tragedy like the one in Paris sparked renewed outrage around the world, and numerous countries, including the United States, France and Russia have stepped up their bombing of ISIS targets in the Middle East. One of the key measures of strength in the defense industry is support from Congress, and the vicious attacks in Paris have increased the focus and resolve here and around the world.
With intense bombing campaigns going on now, investors may be surprised to know that a single bomb can cost as much as $1 million, and considering the number dropped on any given day by one country, the sheer dollar amount can be staggering. The top defense companies in the United States focus much of their efforts on the U.S. defense budget, but they also sell to our allies around the world.
We screened the Merrill Lynch research universe for the defense stocks rated Buy and found three that make good sense for growth accounts to consider now.
This company, like other major defense prime contractors, had a very solid year and makes the list at Merrill Lynch as a top pick stock to buy in the sector. General Dynamics Corp. (NYSE: GD) is a worldwide aerospace and defense company with over 96,000 employees worldwide. It operates through four business groups: Aerospace, Combat Systems, Marine Systems and Information Systems and Technology. The U.S. government is its largest customer, which could continue to bode well.
General Dynamics stock has awarded its investors with returns of about 160% in the past decade, and the company posted outstanding third-quarter numbers on solid execution across the board. It pays regular dividends and has a share repurchase plan in place. This is an outstanding stock for long-term growth portfolios
General Dynamics investors receive a 2% dividend. Merrill Lynch has a whopping $170 price target, while the Thomson/First Call consensus estimate is $166.75. The stock closed most recently at $142.87.