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India's defense spending is usually
pretty low on the list of things that
get investors' attention, but which of
these American companies is making it
one of his top priorities, selling the
country $2.1 billion of maritime patrol
aircraft?
A.) Acme Corporation
(ACME)
B.) Boeing (BA)
C.) General Dynamics (GD)
D.) Motorola (MOT)
E.) Honeywell (HON) |
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Published: September 9, 2009
The
correct answer is
(B.) Boeing
The Stockholm International Peace
Research Institute ranked India the
tenth-largest military spender in
2008. The country is slated to spend
between $50 billion and $55 billion
on military hardware in the next few
years. That's not India's total
military budget: That's what it's
going to spend on actual weapons
systems. Chief among these is a
major contract for 126 fighter jets
that will be worth a total of about
$10 billion.
U.S. weapons manufacturers have an
edge: They've already inked deals in
India, which is why the best way to
profit from India's defense spending
is from Boeing, which has sold the
country $2.1 billion worth of
maritime patrol aircraft.
In recent years, the combination of
the global economic downturn and a
shift in U.S. defense priorities has
put the squeeze on this company.
Boeing isn't going to sit still,
however. It's going to India to make
a $10 billion sale. If Congress or
the White House doesn't want to
continue the F-22 fighter program,
then Boeing will compete for the
$3.5 billion in unmanned aircraft in
the Department of Defense budget.
(To that end, Boeing bought a
manufacturer of drones last year.)
It is also expanding into other
defense-related areas such as
cyber-security.
Boeing's recent problems with design
flaws in its new 787 commercial
plane have rattled the company and
have taken Wall Street's focus off
defense, where more than 50% of the
company's revenue comes from. But
the company still has billions in
other orders just waiting to be
filled -- about five times 2008
sales. So although U.S. defense
spending may ebb, the world is still
a very dangerous place, and military
leaders around the world are keen on
protecting their people. The top 20
countries in the table above (see
intro above) have $13.4 billion to
spend, and you can bet they will
spend some with Boeing.
Boeing is one example of why
StreetAuthority editor Andy
Obermueller scours government
budgets, contracts, disclosures, and
speeches in order to figure out how
the private sector--and investors
like you--can benefit from
government spending both at home and
abroad. Boeing isn't the only find
Andy made; his latest issue of
Government-Driven Investing includes
a bevy of uncovered gems poised to
rake it in as governments around the
world shell it out. To learn the
names of these securities, and to
learn more about Government-Driven
Investing,
please visit this link.
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