Chasing Value: Raytheon creates a real "ray-gun"

Filed under: International markets, Next big thing, Chasing Value, Stocks to Buy, Raytheon Company (RTN), Best Stocks for 2008

You can't put one in your holster yet, but they have done it. The Raytheon Company (NYSE: RTN) has brought H. G. Wells' science fiction invention of the ray gun to reality as an advanced missile defense system.

The first serious battlefield ray gun is now being deployed. And the next generation, now in the laboratory, is coming soon.

It was last July when I posted Chasing Value: Raytheon says 'Game on' highlighting the stock. It was one of this year's picks, and while down, it has out performed the market. I liked it last year, I liked it mid-year and I still like it. The company is a leader in missile defense systems and civilian airport radar and monitoring systems.

As a vital defense R&D company always on the cutting edge, I figured it to be a safe bet. However, given the mess at all of our major airports I felt its technology would always be in demand.

Now, as part of the missle defense program and to detonate road side bombs from a safe distance in Iraq, the ray gun, or "directed-energy weapon," can be deployed from 300 feet away. The system has been named Zeus and the military intends to expand its use to include blowing up incoming shells and small rockets with laser beams. The targets are tracked by radar or, if they are rockets, by infrared sensors.

This defense contractor is basically a tech company trading at a low P/E, P/S and book value while sporting almost a 2.5% yield. Cash and short-term investments have increased for five years running from $661 million to $2.66 billion while reducing outstanding long-term debt from $7.38 billion five years ago to $2.27 billion through the end of last year. 2008 earnings have been up and shareholder equity and cash continue to grow as well.

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.

Chasing Value: Raytheon creates a real "ray-gun" originally appeared on BloggingStocks on Tue, 16 Dec 2008 13:58:00 EST. Please see our terms for use of feeds.

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