Chasing Value: Raytheon is both a defense AND tech stock

25 02 2008

Chasing Value: Raytheon is both a defense AND tech stock

Posted by: in Products and Services

Filed under: Press releases, Products and services, Stocks to Buy, Technology, Raytheon Company (RTN)

This morning Raytheon Co. (NYSE: RTN) is reporting in more detail the role it played in last week’s interception of a satellite 153 miles over the Pacific Ocean. Raytheon is one of my stock picks for the year and I’ve been arguing for a long time that the defense sector is one of the ‘bulletproof places’ to be in a shaky economy. I have also been arguing that RTN is a tech stock of the highest order.

Raytheon makes missile guidance systems among other things. Can you get more high-tech than that? Yes, you can. Why Raytheon itself also designed and built the Sea-Based X-band radar that tracked the satellite prior to the missile engagement and performed the hit assessment afterward. The radar performs the critical functions of cuing, tracking and discriminating a target.

If you want great management, you will find that RTN’s is top notch too. If you’re looking for a huge moat, consider this: most of the software you use in your personal or business life is pretty well entrenched, but which would you’ve more angst about changing, your spreadsheet software or your software for missiles? Bingo! I’m sure you got that one right.

My last review details: Chasing Value: Raytheon (RTN) up on earnings & 2008 outlook and I do not see any downside here. The government can’t get enough of Raytheon as I noted in Sunday Funnies: Using up our missiles. So add it to your watch list. While I don’t see the stock going down based on its own fundamentals, it is possible an opportunity will arise in sympathy with a down market some time in the next few months.

This year Raytheon is up about 7% while the overall market has been down about the same. That’s a 14% spread so far.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares of RTN.