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6 Defense Stocks Rising Above the Sequester

Strong earnings from sector show cost-cutting has been working

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General Dynamics

General Dynamics NYSE:GDGD shares gained on Wednesday as the company’s earnings of $1.81 a share topped analysts’ estimates by 19 cents.  Not surprisingly, the greatest weakness was in General Dynamics’ combat systems unit. Revenue was down 28% in the quarter as earnings slipped 32%, largely on slower international business.

While cost-efficiency is a critical concern for all defense contractors now, GD’s strong commercial aircraft sales also are helping shareholders sleep well at night. Operating earnings in GD’s aerospace business skyrocketed by more than 50% compared to a year ago and margins grew by nearly 3%.

The growth clearly was driven by stronger performance in the Gulfstream aircraft sales, and GD hopes to boost sales if its new long-range Gulfstream G650 this year.

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