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Defense: Strong Moats, Good Growth, Pricey Stocks

U.S. defense contractors are well positioned, but there are few bargains to be had today.

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Christopher Higgins: We are reinitiating coverage on major U.S. defense contractors Lockheed Martin, Raytheon, General Dynamics, and Northrop Grumman. Currently the sector is trading at a 1.1 price/fair value ratio, which indicates to us that there are few bargains to be had.

Lockheed Martin and General Dynamics both have wide moats, and Northrop Grumman and Raytheon enjoy narrow moats. The moats across the industry indicate to us that there are strong competitive advantages for these companies.

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Chris Higgins does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.