The Aerospace Industry is Delivering Science Fiction
The third time is a charm, or at least that's the view that Republican presidential candidate Carly Fiorina holds, presenting a national security plan to the voters of America that called for the re-building of a missile shield that could protect the US from the perils of Russia, China, and any flavor of terrorists. The so-called "Star Wars" missile defense program launched by Ronald Reagan in the 1980s turned into a trillion-dollar moneypit, one that was revived by George W. Bush 15 years later with no more success. Fiorina believes that a missile shield represents the US' best response to a foreign threat, an idea that's growing in not just political and military circles but also in the heavy technology industry where the outlandish proposal grows less outlandish by the day. There's a select number of companies trading on the New York Stock Exchange who receive a huge quantity of government money to pursue weapons research and innovations that bring science fiction closer and closer to reality.
Star Wars Part 3
Laser pointers that drive cats wild work by conveying a specific quantity of energy from point A to point B. A basic laser pointer doesn't have a wavelength long enough to transmit much energy, which is why most are red, which is far closer to the infrared spectrum than it is to the higher-radiation ultraviolet spectrum. Military grade lasers function in the same basic manner as a laser pointer -- point it at an object and hit the button -- but transmit ultraviolet rather than red light which the human eye cannot perceive. Just because you cannot see it, however, does not mean it cannot do damage. Lockheed Martin has the inside track to developing such lasers for the US military, projecting incredible power at light speed to shoot down everything from drones to incoming projectiles. The reason why Lockheed (LMT on the NYSE, trading for $204 per share) is manufacturing technology that's straight out of a movie? Their board of directors finalized a $2.2 billion dollar contract to deliver satellites and laser systems to the US Air Force at the start of October, a move that ratcheted their asking price up by nearly ten percent. With a stock price that's doubled in the past year alone and ample reason to think that there's more room to expand, any investor should consider Lockheed a long-term growth option to stabilize a portfolio.
The force fields that separate persons from harm no longer exist solely in movie studios or video games. By superheating plasma, the same substance found on the 5000-degree surface of the sun, it's possible to create stronger pressure in one direction than any object traveling in the other direction, effectively stopping any rocket or missile from striking. Boeing has taken the preliminary steps to develop a plasma-expansion field, filing a patent for testing on military vehicles. Sensors on the side of a truck or tank can register a flash point and then use rapid-fire laser triggers to superheat any air between the explosion and the delivery area. This design by Boeing (BA on the NYSE, trading for $137 a share) could supplant the existing in-development technology for electrifying the air between a vehicle and a projectile by eliminating a remote threat more efficiently than a vaporization system. Boeing filed a patent for the "force field" in July and had it approved three weeks later. At the moment, there's no information about whether the government has allocated funds for further research and testing, but there's little doubt that the US military would be the largest customer for such an impressive defensive field. Given that such a field could cut the amount of armor required on combat vehicles by two-thirds, there's little doubt that a fat contract lies in the waiting for the aerospace firm, bigger than their current $25-billion-per-year agreement.
Now You See It
Why use a human to aim and fire a gun when you can program the gun to do so itself? The world of robotics has come to all industries, not just trucking, and promises to replace inaccurate and inadequate human performances. The Exacto bullet, developed by Oshkosh Corporation (OSK on the NYSE, trading for $38.93 a share) is capable of changing direction based on a number of triggers, including wind speed, to arrive at its target without going wide. The development of the .50-caliber bullet came at the hands of a contract just under $7 billion for Oshkosh and earmarks further investment in liquid-crystal matrices capable of stopping a bullet by hardening at the point of high impact. Such bullets have the potential to revolutionize warfare as we know it, with successful tests indicating that smart bullets understand when they veer off course and will change their projections automatically. The announcement of the deal at the end of October sent the company's stock up by nearly 20%, a figure that will certainly continue to rise as they continue to develop quality products.
- The Takeaway: military contractors may soak up a lot of taxpayer dollars, but they do so with the confidence of the market behind them. Boeing, Lockheed Martin, and Oshkosh are all very good performers who suffer from very little volatility. Their size allows them to acquire the best talent, the best contracts, and the best dividends. Investors looking primarily for stability or growth will have to look far and wide to find performers as consistent and as capable.
- With the presidential election just around the corner, both candidates will expound upon growing the military further to curry favor with voters. While many election promises often go unfulfilled, defense contractor stocks often grow from speculation and confidence. The sooner that an investor brings in these stocks, the sooner they begin to perform thanks to a long list of promises.