https://www.youtube.com/watch?v=rbfBga47q7s
The defense outlook is looking up and Textron (TXT), a manufacturer of aviation, defense and industrial products, is positioned to be one of the primary beneficiaries.
That’s the key takeaway from a recent HedgeyeTV Black Book presentation in which Hedgeye Industrials analyst and Defense Policy analyst LtGen Emerson "Emo" Gardner USMC ret. collaborated to provide a multifaceted view of Textron’s long-term prospects.
In the excerpt above, Van Sciver discusses Textron’s underappreciated value and Gardner, as a former Department of Defense insider, supplies the defense budget outlook.
Here’s what Van Sciver thinks Wall Street analysts are missing about the company:
- Challenges Overblown – this is not a peak cyclical stock; new product introductions and aftermarket opportunities are offsetting softening market conditions
- Defense Outlook Favorable – the Pentagon’s Defense budget will be increased by $32 billion and more than likely be submitted to the next Congress with no dramatic reductions
- Hidden Growth Potential – the Street numbers are too low so the stock is cheap relative to its opportunities
As Van Sciver says, “This is a name that’s cheap with an evolving story, a growing platform, franchises, technologies and some great investments, so it’s fairly easy to see the narrative shift from a real value name to the realm of growth valuation.”
All told, Van Sciver thinks the stock is worth $50 or more.