Are military stocks the best defense?

Virtually everyone is paying close attention to the stock market these days. Have you kept an eye on military stocks?

Some financial pundits have quipped that the best defense against a lagging economy and uncertain stock situation is investment in military stocks--stocks offered by businesses that do a great deal of business with military customers.

Take a look at the portfolio in the bottom-left corner of the community page to gauge how the stocks of companies, such as Lockheed Martin, Northrop Grumman, and others, are doing throughout each day.

You can even plug in your favorite stock symbol and gain instant feedback. According to CNNMoney.com, these are among the best stocks to watch:

The three best stocks in the sector
FLIR Systems (FLIR), the world’s largest provider of thermal-imaging equipment and night-vision cameras, is worth adding to your portfolio, says Steven Lord on Forbes.com. The company’s growth has been “phenomenal”, with sales doubling since 2001 to $482m last year. Earnings per share should reach $1.20 this year and $1.41 the next, and with a 28% return on equity, $100m in cash and low debt, the firm has among the best financial position of any defence-related stock.

Another company to consider is American Science & Engineering (ASEI), a provider of security and inspection systems. These are used to scan people, baggage, cargo, vehicles and other objects for weapons, explosives, drugs and other contraband, including radioactive materials – the “next big problem” the US needs to tackle. ASEI’s growth has been “exponential”: earnings per share in fiscal 2006 should reach $2.72, versus $1.25 for fiscal 2005. The firm has no debt and trades on a p/e of 15 times forward earnings with a p/e to growth ratio of 0.8, making it an “excellent addition” to any security-related portfolio.

Shares magazine likes defence and space software specialist Vega (VEG). The firm said that it is “on track” with its targets, thanks to large new contracts. It may beat its profit forecasts and on a p/e of 12, the shares still look “an excellent opportunity.”

Do you watch these or others? Let us know!