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This -- -- Wall Street Journal releasing its list of the top stock pickers in the country and all week we've been bringing you the number one name in five different sectors.
Senior analyst and last year his stock pick Huntington Ingalls industries rallied.
About forty personal.
What did you get this ship -- so so it's not one of those sort of names it's mentioned every single thing out there or even every other day.
Absolutely right it is the key that this is you've got you've got to get in there and see what they're doing.
And you've got to go to the shipyards.
See what what changes -- in something like some like ninth -- goals.
-- you really seeing there is a turnaround.
That's not captured in the financial results because ships take years to build.
So once you can identify the changes that have been made there and you can see the cash flow coming which will be huge next year.
That's way ahead of when you actually see the movement.
And then what Woodstock this is a perfect representation of the sweet spot that a lot of these defense stocks are in because.
Been so much talk about military cutbacks and sequester and everything that the public perception.
Is actually a lot worse than the individual stocks right.
No I think that's true but it depends where you play -- one of the things we've been able to shows that over time.
It's not just about the budget.
You can see periods like the 1990s when the budget just collapsed.
-- the reason they outperformed was very strong free cash flow.
Well above what the -- was doing at the time and that's exactly what you see today so some of these if you pick the ones that have the right area -- -- exposure.
Are delivering a lot of cash.
You can make money in the -- so Huntington angles continues to be one of your picks you feel that even with a 40% rise first picked -- there are more opportunities to the upside what will drive that.
In -- gulf shipyards.
These have been a disaster historically but there you go down there you can see the improvement it is radical what they've done down there.
Next year you could see over 400 million in free cash flow and that's on a two billion market cap stock.
Still looking -- still counting everybody's still chasing the dividends and very often overlooked in the dividend chasing field -- Lockheed Martin.
They're giving a dividend of over 5%.
It's roughly 5% out.
It's huge now it is that they are on the cutting edge of weaponry of course -- one would think that they might be -- by sequester but all let's -- then you say into the stock price.
I I think it is and what you have to think about is where the cuts will happen.
And we think the worst period -- -- -- -- the -- -- -- -- Afghanistan -- be be very difficult they have very limited exposure -- war.
They do it's very substantial international exposure to the Middle East missile defense there that is a growth market.
On top of that have they have the F 35.
Now the F 35 has a lot of bad headlines but in fact this is the only solution to our fighter aircraft of the future.
So what you're going to see that program will ultimately grow under any circumstance it's there in the right part of the market.
And they like many companies are delivering quite a bit of cash and you're gonna see them deploy that's a shareholder.
I'm hearing cash flow and free cash flow those are you Herschel -- very Buffett -- and now we go to Boeing for example a Boeing of course have the 787 dreamliner issues.
Are those in the rearview mirror now.
Yes and when you think about commercial aerospace and OEMs -- two things you want you -- an outlook for delivery growth.
And you want improvement in your development programs.
Libby -- is in great shape today strong emerging market demand.
In the need to replace airplanes because of fuel efficiency.
We -- -- like Airbus last year and didn't like -- if you went back a year ago.
But -- Boeing is turned the corner on the 787.
The demand is there.
And we think you're gonna head into some very nice -- Castro who is fuel prices stay low Doug thank you very much for coming and -- hearted congratulations.
Thank -- master stark pictures appreciate we'll put a stop picks up our FaceBook page Hulu work.
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