I'm certainly hoping for a turn-around. Seems they have much invested and could land some major contracts in the future(Missle defense+upgrade of the air controller hardware all over the country). Hope I'm right on this. They took a big hit and sounds like they are trying to rectify the situation.
I think you are right but do you think this stock could get cheaper? You could not recreate the technology and facilities for anywhere close to today's sell price. This is a bargain. The only question is when will they get the act back on the road.
Cheap? First cheap is not good. Inexpensive is good. I hope this stock doesn't get cheaper. Also from a simple pe ratio type of view point, this stock does not appear inexpensive in my eyes. Here is data from today:Ticker - P/Ertnb 16.79noc 7.22lmt 9.73ba 17.92(Raytheon, Northrop Grumman, Lockheed Martin, Boeing)Raytheon is the third largest defense contractor and it trades at the second highest P/E ratio of the top four defense contractors. By looking at the p/e ratios, wouldn't you agree that Northrop is the least expensive? Especially in light of the fact that Northrop hasn't surprised analysts twice in the last 6-9 months?I have serious concerns about the increase in the stock price of rtnb. Isn't it fair to compare it to other companies that it competes with? How much can the price of rtnb increase given that other companies in the same industry all trade at similar or lower p/e ratios? Also, don't the earnings of defense contracts depend on the defense budget, which has done nothing but shrink since the Gulf War? Is there any upside potential in this stock? Especially since its 52 week high was based on inflated earnings estimates?I really have a hard time seeing how the valuation of rtnb will significantly increase. Let me know your thoughts on Raytheon and the p/e comparison that I have done above.
To do a PE compare is looking back -- not forward. Stocks are a leading economic indicator.RTN's earnings were projected last year (before all the trouble) to be over $3 per share this year -- a PE 'potential' of 6. What shareholders want to see is RTN recapture its earning potential. The market is saving it is having trouble seeing that potential return. If it does return, then the stock will go up. If it does not, your analysis is right on the money. On that basis, compared to its peers, RTN is too high.
Yes, it could get cheaper, crazy as that sounds. Remember, the downward pressure comes not only from Raytheon's current difficulties, but also from other, booming sectors where people think they can get a better return. The money just goes there instead, and the Raytheons keep going down.Recently I've gotten burned (or maybe just singed) making other value plays too early. I'm waiting on this one. It may not go down any further, but it's not exactly going to fly up, either. I'm feeling very patient.
roblawrence: Instead of waiting around why not write call options? Is a 20% return too low? I recently purchased RTN and then wrote out of the money call options after the stock went up almost two points. If I lose the stock, I make 34% (by August). If not, I have a 20% return (which I have also invested and written call options on). Value plays are a good idea (and I have been investing since the late 1960's). But making them pay by writing options is a way to add spice to a good idea.
I agree with dduct that RTNA is a good buy and at this price. The question is when it will move. According to a book I read and the title and authur escape me, RTNA is in a period of accumulation right now at this price. It could go lower if the big money players wish to shake out the small guys even a little more. I don't see that happening so we keep watching the accumulation at this level and when it starts it's move up you get on. Problem with this is it could take months or years. If you like this stock or even own it begin the observation period and hope it's not years. I'll be back in after my 31 day tax loss period.
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