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How to Invest in Military Stocks The Motley Fool. Add Trusted Software Publisher Win7 Key. Over the past year, the five biggest defense stocks have averaged returns of more than 3. Military Stock. Trailing 1. Month Stock Performance. Dividend Yield. Total Return. Boeing NYSE BA7. General Dynamics NYSE GD3. Northrop Grumman NYSE NOC2. Lockheed Martin NYSE LMT1. Raytheon NYSE RTN2. Premium Accounts Txt' title='Premium Accounts Txt' />This week, Microsoft removed the preview label from its Outlook. Premium email service, so U. S. Step 4 Choose fields to include. Fields in the box on the right will be included with your order. Use the UpDown buttons to choose which order you want the fields in. Premium Accounts Txt' title='Premium Accounts Txt' />DATA SOURCE FINVIZ. COM. Despite the run up, with things heating up again in North Korea in the Middle East, they never cooled off, investment banker Morgan Stanley thinks military stocks could continue to post strong financial returns for some time to come as they explained in a recent series of defense stock ratings. Then again, like Yogi Berra used to say, Its tough to make predictions, especially about the future. Yes, Donald Trump has promised to increase defense spending bigly next year. Yes, hes authorized billions of dollars worth of arms sales to foreign militaries. Software For Viewing Mts Files. And, yes, all of that should mean more money for defense companies, which should mean and already has meant good news for defense stocks. Problem is, as the defense budget swells, so, too, do the prices of aerospace and defense stocks, which are no longer as cheap as they once were. Discover the latest Denim Guide ideas at MS. If you have been thinking about how to invest in military stocks, its more important than ever to keep an eye on valuation. Judged on the numbers, only one defense stock is a bargain today. Image source Textron. How to value a defense stock. Military stocks are just like any other stock, in that you can value them on earnings, dividends, and free cash flow. Program De De Pe Youtube Mp3'>Program De De Pe Youtube Mp3. But Ive said this before and Ill say it again Over long periods of time, military stocks tend to revert to an average valuation based on their annual sales. Over the 1. 7 years since this century began, military stocks as a group have sold for about one times annual sales on average but theyre selling far more than that average today. Currently, the five defense stocks named above sell for an average of 1. Valued at 1. 5 times sales, Boeing is the cheapest of the five, while Raytheon is the most expensive 2. Lockheed Martin is right in the middle at 1. But every single one of the large biggest defense contractors costs nearly twice its average valuation over the past two decades today. Two reasons military stocks are not great bargains. Why is that Despite the headlines, its not because these companies have above average growth prospects. Actually, the average defense stock is expected to grow its earnings at no more than 1. S P 5. 00. Nor is it because military stocks pay great dividends at least, not anymore. Rather, dividends within this group average a bit less than the 2 common among other S P 5. Moreover, both the average growth rate and the average dividend yield of the defense companies rely on a big boost from Boeing, which pays the highest dividend yield in the group 2. If not for Boeing being in the group, military stocks as a whole would look even less attractive relative to the rest of the market. No, the real reason investors are paying up for defense stocks today I think is because military stocks are presently earning some of the highest profit margins theyve ever earned in recorded history. This fact has not gone unnoticed by President Trump, whos called upon Lockheed Martin, Boeing, and others to roll back their prices. If and when defense stocks profit margins return to historical norms, Id expect to see their price to sales ratios revert to the norm as well, which brings me to my most practical bit of advice The one military stock that still sells for less than its annual sales i. TextronNYSE TXT. Textron stock is a bargain in the rough. Priced at 0. 9 times sales today, Textron doesnt sell at a huge discount to the average valuation for military stocks. But Textron stock does offer a modest margin of safety and its a whole lot cheaper than its peers. This is probably partly a function of Textrons operating profit margin, which at 7. Its a function partly of its debt load, which at 3. Those caveats aside, beggars cant be choosers. With military stocks as a group clearly overvalued, Textron is the closest thing to a bargain defense investors will find on the market today.