04-25-2015, 01:18 PM
(04-25-2015, 10:28 AM)Kerim Wrote: What arguments for RTN am I overlooking?
My reasons for choosing RTN:
1. Missiles are a damn good business.
I can't recall the expiration time right now, but I believe it's somewhere between 10 and 15 years for most missile types. Now of course missiles are bought in big batches and stored, the oldest used first. But where I am going with this is, every single year, war or no war, a ridiculous amount of missiles will be bought simply because the old ones (in western countries at least) are used before they expire. If there is no real use then they will be shot during exercises. At the same time countries keep replenishing their storage with the new versions which are always slightly modified, win for the military and win for the company producing said missiles. RTN = number one when it comes to missiles.
2. Future systems.
I'll pack 4 things into this one. Communications, intelligence systems, cyber security and missile defence. All of those have huge potential. HUGE. RTN is heavily investing on all of them and is already pretty much the number one name when it comes to missile defence.
3. Increasing foreign sales.
One of the big issues with most defence contractors, RTN included, is the huge % of revenue coming from the USA. But obviously these big companies have the politicians on their side (I wonder why?....) so they will keep getting the contracts. What I like about RTN is that they are constantly getting new contracts from outside of the USA. Just last week Poland chose the Patriot missile defence system in a deal that could be worth up the $7 billion. Not only does it open new markets for systems maintenance/upgrades and future sales but it also lowers their exposure to changes in the US defence budget.
4. Increased instability.
Hey, sucks to say but the more people want to kill each other, the more companies like RTN will profit. The simple fact that there are risks due to general instability will already force governments to pay more attention to defensive measures. (hello my friends from #2: secure communications, intelligence, cyber security and missile defence)
In my opinion, RTN has really played it right when it comes to setting themselves up for a bright future. The only slight "miss" would be that as far as I know they aren't too active on the drone side of things, but then again I'm sure that while they don't manufacture the drones themselves there will be a lot of RTN technology in some of them. The payloads will certainly consist of many weapons manufactured by RTN.
All of the above might be slightly biased since RTN is the single biggest holding in my portfolio.