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Monday, November 13, 2006

As Democrats Attack Defense Spending, Warmongers Make Up The Difference

Stocks: (BA)(LMT)(NOC)

Investors in defense stocks are shaking in their boots. The concern is that the Democrats who know control both houses of Congress will cut weapons spending and bring back American troops from Iraq. The media has been quick to flag concerns that investors in companies like Lockheed Martin could get hurt.

But, fear not. From September 2005 to September 2006, sales agreements with foreign military interests hit $21 billion. That is more than double what it was a year ago. Considering that Lockheed Martin's total revenue last year was just above $37 billion, and it puts the number in some context. Pakistan place a $5 billion order recently for Lockheed F-16 jets. That's just one product from one company.

Canada and Australia recently ordered C-17 cargo planes from Boeing.

There have been bans on selling arms to some overseas countries, but many of those have been lifed. Lockheed, Northrup Grumman, and Boeing will probably benefit from a rise in orders next year that could easily exceed the $21 billion figure for the twelve months ending in September.

Lockheed's stock traded down right after the election.

Not to worry.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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