New York, New York - September 17, 2012 (Investorideas.com Newswire,
www.homelanddefensestocks.com)
Investorideas.com, an investor research portal specializing in sector
research including defense and Homeland Defense stocks issues a recent
interview with Mr. Scott Sacknoff of the SPADE Defense Index (NYSE:
^DXS).
Scott Sacknoff manages the SPADE Defense Index (NYSE: ^DXS), a
benchmark for investing in the aerospace and defense sector. It has been
licensed to Powershares whose Aerospace & Defense ETF (NYSE: PPA)
tracks the performance of the Index.
Investorideas.com staff
Q. Thank you for joining us today. Where do you see the defense market at this time?
Scott Sacknoff, SPADE Defense Index
From a news perspective, most of the attention for the past several
months has focused on the impact of sequestration and the fiscal cliff
that could occur at year's end; and rightly so. Were it to occur, the
impact would be severe, costing well more than a million defense-related
jobs and new budget cuts in excess of $50 billion annually over the
next decade (or, of course, until Congress changes the plan). What it
means is that investors interested in the sector have been playing it
very cautiously. Trading volumes are down significantly. Small cap
defense stocks as a whole continue to underperform as they have for the
past several years although there are some signs of life. From a
historical valuation perspective, aerospace and defense stocks remain
highly attractive and, thanks to the calendar roll-over, PPA, which
tracks the industry benchmark SPADE Defense Index is hovering near
52-week highs.
Investorideas.com
What do you see as the likelihood of a deal that fixes sequestration issue?
Scott Sacknoff, SPADE Defense Index
I'd like to thank that beyond political posturing, most of our
elected officials believe in doing what's best for our country. Is
there waste that could be cut at federal agencies, of course. However,
deliberately pushing our country into recession and double digit
unemployment, well that's just insanity. The reality is that I fear
that the fix will come not only after the election but after the new
Congress takes office in January and they work on a retroactive
solution. Unfortunately, from an investing perspective, by then
the damage will have been done and a big drop in the market would have
occurred. If a solution is reached before the election or immediately
thereafter, then there are a number of positives for the sector.
Investorideas.com
So shifting from politics, share with us some bright spots in A&D.
Scott Sacknoff , SPADE Defense Index
As anticipated, commercial aerospace is hitting on all cylinders
and once the political issues surrounding the U.S. election are lifted,
I'd expect revenues and profits to shift sharply higher. Boeing has
announced increased production levels for the 787 and 737 over the next
two years and its new 737 Max has been very well received by the global
airlines. This should lead to continued growth in aerospace
manufacturing levels through the end of the decade.
Investorideas.com
Barring sequestration, what do you see for the U.S. defense budget?
Scott Sacknoff , SPADE Defense Index
The specifics are still a bit cloudy. The trend for defense
spending has been flattening after the sector grew post-9/11 for nearly a
decade. Near-term some decline in total U.S. defense spending is a
given as DoD seeks to restructure in a post-war environment while trying
to prepare for new and anticipated threats; and all the while try to
reduce total spending. An earlier budget deal agreed to with Congress
will see a savings of around $500 billion over the next decade, but the
defense leadership sees this level as being manageable with most of the
cuts coming from restructuring and eliminating waste. In fact, as
orders from international governments continue to rise, to the tune of
more than $60 billion in 2011, I expect this growing line of business
could offset some of the effects of the budget restructuring.
Investorideas.com
And the firms?
Scott Sacknoff , SPADE Defense Index
Unlike the post-Soviet collapse era, defense firms have had several
years to improve their fiscal situation, shed or spin-off lower margin
businesses, and acquire firms to better position themselves going
forward. With valuations low and cash-on-hand high, most companies are
very healthy and could ride out this downcycle without major issues.
With margin expansion, we could even see their prices rise over time.
Investorideas.com
Lastly, how will the presidential election impact the sector?
Scott Sacknoff , SPADE Defense Index
The truth is everything said now is just political posturing.
Historically, the defense budgets rise and fall based on the current
state of the world and not which party controls the White House.
Budgets rose during Vietnam (Kennedy, Johnson) and fell post-Vietnam
(Carter), rose with Cold War tensions (Reagan) and fell after the Soviet
collapse (Bush, Clinton), started rising when the cuts seemed to deep
(Clinton) and rose post 9/11 (Bush). The budget is likely to see some
cuts due to debt reduction and would rise in the event of an Iran
nuclear situation or another terrorist attack. Ultimately, it won't
matter who is President, it’s the world that matters.
Investorideas.com
Thank you for your time.
About InvestorIdeas.com:
InvestorIdeas.com is a leader in investor stock research by sector,
featuring stock news, commentary and trading alerts in leading sectors
including defense and Homeland Security stocks, biotech, tech, mining,
energy, water, renewable energy, beverage stocks and more.
Follow Investorideas.com on Twitter
http://twitter.com/#!/Investorideas
Follow Investorideas.com on Facebook
http://www.facebook.com/Investorideas
Follow Investorideas.com News on Linkedin.com/today at
http://www.linkedin.com/today/investorideas.com
Sign up for the free investor news and stock alerts http://www.investorideas.com/Resources/Newsletter.asp
Become an Investorideas.com Member and access our 14 online
stock directories 24/7 - water, renewable energy, mining stocks and
more…
http://www.investorideas.com/membership/
Disclaimer/ Disclosure :
The Investorideas.com is a third party publisher of news and research
Our sites do not make recommendations, but offer information portals to
research news, articles, stock lists and recent research. Nothing on our
sites should be construed as an offer or solicitation to buy or sell
products or securities. This site is currently compensated by featured
companies, news submissions and online advertising.
BC Residents and Investor Disclaimer : Effective September 15 2008 -
all BC investors should review all OTC and Pink sheet listed companies
for adherence in new disclosure filings and filing appropriate documents
with Sedar. Read for more info:
http://www.bcsc.bc.ca/release.aspx?id=6894
Contact:
Scott Sacknoff
SPADE Defense Index
www.spadeindex.com
scott@spadeindex.com
Or Investor Ideas
800-665-0411 -
www.Investorideas.com
Kratos Defense & Security Solutions, Inc. (KTOS) is a
specialized National Security technology business providing mission
critical products, services and solutions for United States National
Security. Kratos' core capabilities are sophisticated engineering,
manufacturing and system integration offerings for National Security
platforms and programs. Kratos' areas of expertise include Command,
Control, Communications, Computing, Combat Systems, Intelligence,
Surveillance and Reconnaissance (C5ISR), satellite communication
systems, unmanned systems, cyber warfare, cyber security, information
assurance, and critical infrastructure security. Kratos has primarily an
engineering and technically oriented work force of approximately 4,400.
The vast majority of Kratos' work is performed on a military base, in a
secure facility or at a critical infrastructure location. Kratos'
primary end customers are National Security related agencies. News and
information are available at www.KratosDefense.com.
