Funding cuts on Army contracts
The Army decided to cut down the $1 billion per year Warfighter Focus Contract into ten different programs after a cutback in funding. Raytheon is the incumbent on the contract. The biggest portion of the divided program could have a value as high as $400 million a year. It will likely be awarded in 4Q17. Part of the divided program will likely be allocated to small businesses. Raytheon partnered with CSRA, while Lockheed Martin (LMT) teamed up with Cubic on the new deal.
Defense could defend your portfolio from political risks
With the US presidential elections in a few weeks, investors might be looking for a cover that protects their portfolio from political risks. The specifics offered by both Hillary Clinton and Donald Trump regarding their policies have been varied and differ by sector. However, it seems like both candidates are interested in strengthening the defense sector (PPA).
For this reason, in the upcoming elections, defense might become the best offense for your portfolio. Credit Suisse confirmed this in a note to its clients. It cited L-3 Communications (LLL), Raytheon (RTN), and General Dynamics (GD) as its picks to hedge against the election cycle. However, Highland Capital Management, a $17 billion asset Management Company, said that defense would benefit from a Trump administration. According to the firm, Hillary Clinton is probably “neutral to positive” for the industry.