Scott Sacknoff (SPADE Investor) submits: More than 60% of companies have a price-to-sales ratio under 1.0.More than 60% have a price-to-equity ratio well under 14 and many under 10.Even in the worst recession in decades, the sector contributes a positive trade balance and produces billions in net exports.The sector has declined from its April 2010 peak by 18.06% and is 33.48% from its all-time close (tracking the market's decline) --but this after a
By Scott Sacknoff (SPADE Investor): In May aerospace and defense stocks, nearly doubled the performance of the S&P500, gaining more than 6% in the month. YTD, the sector is now outperforming the S&P500 by more than 150 bps.
Scott Sacknoff (SPADE Investor) submits: Although headwinds still exist (which should be resolved somewhat with the approval of the FY-2011 budget and release of the FY-2012 next week) the aerospace and defense sector has been showing significant strength over recent months.
By Scott Sacknoff (SPADE Investor): Aerospace and defense stocks have been on a significant run over the past year, reaching historic highs, with the SPADE Defense Index (ticker: DXS) up more than 40%, nearly double the return of the S&P500. Year-to-date, the sector has also outperformed the broader markets and is up nearly 28%, outperforming the broader markets by more than 700 basis points. And from the chart, the gap has accelerated over the past quarter.
(click to enlarge)
By Scott Sacknoff (SPADE Investor): I could spend this month’s commentary talking about technical trends, resistance levels, fundamentals, etc. but the reality is, that would be a waste of time -- yours and mine.
By Scott Sacknoff (SPADE Investor): The year has been relatively quiet when it comes to large Aerospace & Defense acquisitions which is not necessarily a surprise. Although stocks of many firms are at historic highs and many of the larger firms are flush with cash, the likelihood of a major consolidation is not anticipated to take place as approval by the Department of Defense would see significant scrutiny.
By Vince Martin:Defense stocks have rallied over the past two weeks, buoyed by the strength in the broad market. The Spade Defense Index is now re-testing near term highs not seen since the late-summer stock market collapse [click to enlarge]:
1-year chart of Spade Defense Index, courtesy marketwatch.com
By Scott Sacknoff (SPADE Investor): The news that the two largest European defense companies (BAE, based and listed in the United Kingdom and EADS, based and listed in France and Germany) were discussing a merger caught the sector by surprise. At first glance, the creation of a behemoth with $90 billion in sales is intriguing. The firm's cores are, for the most part, complimentary.
By John Kozey:
Investors are pushing sector rotation toward more cyclical sectors and the former defensive leaders are lagging. Industrials are underperforming, with the aerospace and defense industry outgunning both the sector average and also the S&P 500 in total return year to date.