10 Best Defense Stocks To Buy For 2014

For Northrop Grumman (NYSE: NOC  ) , 2013 is turning into a year of firsts.

In May, the defense contractor's X-47B Unmanned Combat Air System (UCAS) demonstrator successfully conducted the first-ever launch from the deck of a moving aircraft carrier. Yesterday, it made the first-ever landing.

X-47B. Source: Wikimedia Commons.

In a joint press release Wednesday, the U.S. Navy and Northrop Grumman described how the Northrop Grumman-built aircraft landed on the deck of the nuclear-powered aircraft carrier USS George H.W. Bush (CVN 77) off the coast of Virginia at 12:23 p.m. -- sans pilot. Launched from Naval Air Station Patuxent River in Maryland earlier in the day, the X-47B was remotely piloted by a mission operator aboard the carrier, flown 35 minutes to its target, there made several planned precision approaches, and then made an arrested landing safely on the carrier deck.

Top 5 Small Cap Companies To Invest In Right Now: Airbus Group NV (EADSY)

Airbus Group NV, known as European Aeronautic Defence and Space Company EADS NV, is a Netherlands-based company active within the aerospace and defense sector. The Company manufactures aircrafts, helicopters, commercial space launch vehicles, missiles, satellites, defense systems and defense electronics, and offers services related to these activities. The Company oprates four divisions. The Airbus division comprises the Airbus Commercial and Airbus Military segments, which develop, manufacture, market and sell commercial jet aircrafts, military transport aircrafts and special mission aircrafts, among others. The Eurocopter division develops, markets and sells civil and military helicopters. The Astrium division develops, manufactures and sells satellites, orbital infrastructures and launchers, as well as provides space-related services. The Cassidian division develops, manufactures and sells missiles systems, military combat and training aircrafts, among others. Advisors' Opinion:

• [By Ben Levisohn]

  Shares of Boeing have dropped 8.9% this year, after gaining 84% in 2013. Airbus (EADSY), by comparison, has fallen 9.2% in 2014, after gaining 94% last year, while Embraer (ERJ) has gained 6.4% this year after rising 14% in 2013.

• [By Johanna Bennett]

  Boeing�� stock gained 84% in 2013 beating the average Aerospace & Defense company by more than 20 percentage points, thanks to a huge rush of orders from emerging economies, a dividend hike and other catalysts that also helped boost Airbus (EADSY). The stock was named a top pick by Citigroup�� Jason Gursky.

10 Best Defense Stocks To Buy For 2014: United Technologies Corporation(UTX)

United Technologies Corporation provides technology products and services to the building systems and aerospace industries worldwide. The company?s Otis segment designs, manufactures, sells, and installs passenger and freight elevators, escalators, and moving walkways, as well as provides maintenance and repair services. Its Carrier segment offers heating, ventilating, air conditioning, and refrigeration systems, controls, services, and energy-efficient products for residential, commercial, industrial, and transportation applications. The company?s UTC Fire and Security segment provides electronic security products comprising intruder alarms, and access control and video surveillance systems; fire safety products, such as specialty hazard detection and fixed suppression products, fire extinguishers, fire detection and life safety systems, and other firefighting equipment; systems integration, video surveillance, installation, maintenance, and inspection services; and mon itoring, response, and security personnel services. Its Pratt and Whitney segment supplies aircraft engines for the commercial, military, business jet, and general aviation markets; industrial gas turbines; geo thermal power systems; and space propulsion systems, as well as provides fleet management, maintenance, repair, and overhaul services. The company?s Hamilton Sundstrand segment supplies aerospace products, such as power generation, management and distribution, flight control, engine control, environmental control, auxiliary power units, and propeller systems; and industrial products, including air compressors, metering pumps, and fluid handling equipment under the Sullair, Sundyne, and Milton Roy names. Its Sikorsky segment manufactures military and commercial helicopters, as well as offers aftermarket helicopter and aircraft parts and services. United Technologies Corporation was founded in 1934 and is based in Hartford, Connecticut.

Advisors' Opinion:

• [By MONEYMORNING]

  Brian Leland, a product manager at Interlogix, a unit of United Technologies Corp. (NYSE: UTX), says interactive services are more affordable now than ever before. And that means the industry has a chance to boost the U.S. residential security system penetration rate from the stagnant 18% to 20% of the past decade.

• [By Rich Smith]

  Following up on January's announcement that Hawaiian Airlines (NASDAQ: HA  ) is buying 16 new A321neo airliners from Airbus -- and optioning nine more -- airplane engine maker United Technologies (NYSE: UTX  ) said Thursday that it will be supplying the engines for all 25 airplanes.

10 Best Defense Stocks To Buy For 2014: Hexcel Corp (HXL)

Hexcel Corporation (Hexcel), incorporated in 1948, is a composites company. The Company develops, manufactures and markets composites, including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems, adhesives and composite structures, for use in Commercial Aerospace, Space and Defense, and Industrial Applications. Its products are used in a variety of end applications, such as commercial and military aircraft, space launch vehicles and satellites, wind turbine blades, automotive, bikes, skis and a variety of other industrial applications. Hexcel has two segments: Composite Materials and Engineered Products. The Composite Materials consists of carbon fiber, reinforcements for composites, honeycomb core and matrix product lines. The Engineered Products consists of composite structures and specially machined honeycomb product lines.

Composite Materials

The Composite Materials segment manufactures and markets carbon fibers, fabrics and specialty reinforcements, prepregs, structural adhesives, honeycomb, composite panels, molding compounds, polyurethane systems and laminates that are incorporated into many applications, including military and commercial aircraft, wind turbine blades, recreational products and other industrial applications. HexTow carbon fibers are manufactured for sale to third-party customers, as well as for its own use in manufacturing certain reinforcements and composite materials. Carbon fibers are woven into carbon fabrics, used as reinforcement in conjunction with a resin matrix to produce pre-impregnated composite materials. Carbon fibers is also used in filament winding, hand layup, automatic tape layup and advanced fiber placement to produce finished composite components. Its carbon fibers��product applications include structural components for commercial and military aircraft, space launch vehicles, and certain other applications, such as recreational and industrial equipment.

Industrial fabrics and specialty reinforcements are ma! de from a variety of fibers, including carbon, aramid and other polymers, several types of fiberglass, quartz, ceramic and other specialty fibers. These reinforcements are used in the production of prepregs and other matrix materials used in primary and secondary structural aerospace applications, such as wing components, horizontal and vertical stabilizer components, fairings, radomes and engine nacelles, as well as overhead storage bins and other interior components. Hexcel�� reinforcements are also used in the manufacture of a variety of industrial and recreational products, such as wind energy blades, automotive components, boats, surfboards, skis and other sporting goods equipment.

HexPly prepregs are manufactured for sale to third-party customers and for internal use by its engineered products segment in manufacturing composite laminates and monolithic structures, including finished components for aircraft structures and interiors. Prepregs are manufactured by combining reinforcement fabrics or unidirectional fibers with a resin matrix to form a composite material with structural properties not present in either of the constituent materials. Reinforcement fabrics used in the manufacture of prepregs include glass, carbon, aramid, quartz, ceramic and other specialty reinforcements. Resin matrices include bismaleimide, cyanate ester, epoxy, phenolic, polyester, polyimide and other specialty resins.

Other fiber reinforced matrix developments include HexMC, a form of quasi-isotropic carbon fiber prepreg that enables small to medium sized composite components to be mass produced. HexTOOL is a specialized form of HexMC for use in the construction of high temperature composite tooling. HexFIT film infusion material is a product that combines resin films and dry fiber reinforcements in production and enables the manufacture of contoured composite structures, such as wind turbine blades.

Polymer matrix materials are sold in bulk and film form for use in direct pro! cess manu! facturing of composite parts. Resins can be combined with fiber reinforcements in manufacturing processes, such as resin transfer molding (RTM), resin film infusion (RFI) or vacuum assisted resin transfer molding (VARTM) to produce composite components for both aerospace and industrial applications. Hexcel manufactures and markets a range of Redux film and paste adhesives. These structural adhesives, which bond metal to metal and composites and honeycomb structures, are used in the aerospace industry and for many industrial applications.

HexWeb honeycomb is a cellular structure consisting of nested hexagonal cells. The product is similar in appearance to a cross-sectional slice of a beehive. It can also be manufactured in asymmetric cell configurations for more specialized applications. Honeycomb is primarily used as a lightweight core material and acts as an energy absorber. When sandwiched between composite or metallic facing skins, honeycomb increases the stiffness of the structure, while adding very little weight. The Company produces honeycomb from a number of metallic and non-metallic materials. Its metallic honeycomb is made from aluminum and is available in a selection of alloys, cell sizes and dimensions. Non-metallic materials used in the manufacture of honeycomb include fiberglass, carbon fiber, thermoplastics, non-flammable aramid papers, aramid fiber and other specialty materials. During the year ended December 31, 2011, revenues for the Composite Materials segment to third-party customers represented approximately 77% of its total revenues.

Engineered Products

The Engineered Products segment manufactures and markets composite structures and precision machined honeycomb parts for use in the aerospace industry. Composite structures are manufactured from a variety of composite and other materials, including prepregs, honeycomb, structural adhesives and advanced molding materials, using such manufacturing processes, as autoclave processing, multi-axis nu! merically! controlled machining, heat forming, compression molding and other composite manufacturing techniques. During 2011, revenues for the Engineered Products segment to third-party customers represented approximately 23% of its total revenues. The Engineered Products business unit has a 50% ownership interest in a Malaysian joint venture, Asian Composites Manufacturing Sdn. Bhd.

Advisors' Opinion:

• [By Rich Smith]

  This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines include a pair of aerospace upgrades for European Aeronautic Defence and Space Company (NASDAQOTH: EADSY  ) and Hexcel (NYSE: HXL  ) . But it's not all good news, so let's start off by finding out why.

• [By MONEYMORNING.COM]

  There's also the advanced materials firm Hexcel Corp. (NYSE: HXL), which supplies honeycomb composites to some of the biggest names in the aerospace industry.

• [By John Persinos]

  The standout stocks in this segment are Hexcel Corp. (HXL), the leading producer of carbon composites, and Allegheny Technologies (ATI), which dominates the market in titanium.

10 Best Defense Stocks To Buy For 2014: Wesco Aircraft Holdings Inc (WAIR)

Wesco Aircraft Holdings, Inc., formerly Wesco Holdings, Inc., incorporated on July 21, 2006, a holding company for Wesco Aircraft Hardware Corp. The Company is a distributor and provider of supply chain management services to the global aerospace industry. Its services range from traditional distribution to the management of supplier relationships, quality assurance, kitting, just-in-time (JIT), delivery and point-of-use inventory management. The Company operated principally in three geographic areas, North America, Europe and markets, such as Asia, Pacific Rim and the Middle East. Wesco Aircraft Hardware Corp, its wholly owned, primary domestic operating subsidiary, Wesco Aircraft Europe, Ltd., its primary foreign operating subsidiary, and certain other foreign operating subsidiaries, in connection with the acquisition of 100% of the outstanding stock of Wesco Aircraft Hardware Corp., Wesco Aircraft Israel and the European entities of Flintbrook Ltd., Wesco Aircraft France and Wesco Aircraft Germany by Wesco Aircraft. In July 2012, the Company completed the acquisition of Interfast Inc. In March 2014, Wesco Aircraft Holdings Inc completed the acquisition of Haas Group Inc from certain investment funds affiliated with The Jordan Company, L.P.

Kitting involves the packaging of an entire bill of materials or a complete ship-set of parts, which reduces the amount of time workers spend retrieving parts from storage locations. Kits can be customized in varying configurations and sizes and can contain up to several hundred different parts. JIT supply chain management involves the delivery of parts on an as-needed basis to the point-of-use at a customer's manufacturing line. The Company supplies approximately 450,000 different stock keeping units (SKUs), including hardware, bearings, tools, electronic components and machined parts. During the fiscal year ended September 31, 2010 (fiscal 2010), sales of hardware represented 80% of its net sales, with highly engineered fasteners constituting 83% o! f that amount. The Company serves its customers under three types of arrangements: JIT contracts, which govern outsourced supply chain management services; long term agreements (LTAs), which set prices for specific parts; and ad hoc sales. JIT contracts and LTAs, together consists of approximately 63% of its fiscal 2010 net sales. The Company supplies products to approximately every Western aircraft in production, including the B-787, B-737, B-747, A-320, JSF and V-22.

Hardware

Sales of C class aerospace hardware represented approximately 80% of its fiscal 2010 product sales. Fasteners are its product category, consisting of approximately 83% of its hardware sales in fiscal 2010. Fasteners include a range of engineered aerospace parts that are designed to hold together two or more components, such as rivets (both blind and solid), bolts (including blind bolts), screws, nuts and washers. Many of these fasteners are designed for use in specific aircraft platforms and others can be used across multiple platforms.

Bearings

The Company offers aerospace bearings. Its product offering includes a variety of standard anti-friction products designed to both commercial and military aircraft specifications, such as airframe control bearings, rod ends, spherical bearings, ball bearing rod ends, roller bearings and bushings.

Electronic Components

The Company offers interconnect and electro-mechanical products, including connectors, relays, switches, circuit breakers and lighted products. The Company also offers value-added assembled products, including mil-circular and rack and panel connectors and illuminated push button switches. The Company maintains connector components in inventory, which allows the Company to respond to customer orders. In addition, its lighted switch assembly operation affords customers same day service, including engraving capabilities in multiple languages.

Machined Parts and Other

Machined par! ts are de! signed for a specific customer and are assigned original product manufacturers (OEM)-specific SKUs. The machined parts, the Company distributes include laser cut or stamped brackets, milled parts, shims, stampings, turned parts and welded assemblies made of materials ranging from high-grade steel or titanium to nickel based alloys. The Company stock a range of tools needed for the installation of its products, including air and hydraulic tools, as well as drill motors, and the Company also offers factory authorized maintenance and repair services for these tools. In addition to selling these tools, the Company also rents or leases these tools to its customers.

Advisors' Opinion:

• [By Victor Selva]

  The company has a current ratio of 16.25% which is higher than the one registered by Embraer S.A. (ERJ) and Wesco Aircraft Holdings Inc (WAIR), but lower than Huntington Ingalls Industries, Northrop Grumman Corp (NOC) and Boeing Co (BA). But for investors looking for a higher ROE, Lockheed Martin Corporation (LMT) could be the option.

• [By Ben Levisohn]

  Stallard sees KEYW Holding (KEYW) and Textron (TXT) potentially missing earnings, while Honeywell (HON),� Alliant Techsystems (ATK),�Lockheed Martin (LMT),�Raytheon (RTN) and�Wesco Aircraft (WAIR) could beat.

• [By Holly LaFon]

  We initiated a small position in Wesco Aircraft Holdings (WAIR) during the quarter. Wesco is a distributor and supply chain manager to the commercial and military aerospace markets. The company should benefit from the multi-year commercial aerospace build-out that is underway. We expect this tailwind to provide visible growth through at least 2017. Wesco also has an opportunity to provide more services to large defense contractors as funding pressures force the industry to become more efficient. If the company can improve margins along the way, we think the resulting earnings growth could provide reasonable-to-good return potential for the stock.From Wallace Weitz (Trades, Portfolio)'s first quarter 2014 report.Also check out: Wallace Weitz Undervalued Stocks Wallace Weitz Top Growth Companies Wallace Weitz High Yield stocks, and Stocks that Wallace Weitz keeps buying Currently 0.00/512345

  Rating: 0.0/5 (0 votes)

• [By Seth Jayson]

  Calling all cash flows
  When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Wesco Aircraft Holdings (NYSE: WAIR  ) , whose recent revenue and earnings are plotted below.

10 Best Defense Stocks To Buy For 2014: Spirit Aerosystems Holdings Inc.(SPR)

Spirit AeroSystems Holdings, Inc., through its subsidiaries, designs and manufactures commercial aerostructures worldwide. It operates in three segments: Fuselage Systems, Propulsion Systems, and Wing Systems. The Fuselage Systems segment develops, produces, and markets forward, mid, and rear fuselage sections and systems primarily to aircraft original equipment manufacturers (OEMs), as well as offers related spares, and maintenance, repair, and overhaul (MRO) services. This segment also offers rotorcraft comprising forward cockpit and cabin for military aircrafts. The Propulsion Systems segment engages in the development, production, and marketing of struts/pylons; nacelles, including thrust reversers; and related engine structural components primarily to aircraft or engine OEMs, as well as provides related spares and MRO services. The Wing Systems segment develops, produces, and markets wings and wing components comprising flight control surfaces and other miscellaneous structural parts primarily to aircraft OEMs, as well as offers related spares and MRO services. This segment is also involved in designing, engineering, and manufacturing structural components for military aircrafts, including low observables that are radar absorbent and translucent materials; and radome new builds and refurbishment. It also provides other military services, such as fabrication, bonding, assembly, testing, tooling, processing, engineering analysis, and training. Spirit AeroSystems Holdings, Inc. serves large commercial airplanes, business and regional jets, and military/helicopter sectors of the aerostructures industry. The company was formerly known as Mid-Western Aircraft Systems Holdings, Inc. Spirit AeroSystems Holdings, Inc. is headquartered in Wichita, Kansas.

Advisors' Opinion:

• [By Inyoung Hwang]

  Axel Springer AG (SPR) declined 1.5 percent to 43.43 euros. Goldman Sachs Group Inc. cut its rating on Europe�� biggest newspaper publisher to sell from neutral, saying its valuation is the highest of the publishers it covers. Shares trade at 18.6 times earnings compared with 16.3 times for the DAX.

• [By Jake L'Ecuyer]

  Spirit AeroSystems (NYSE: SPR) was up as well, gaining 6.74 percent to $32.48 as the company beat strongly on its top and bottom lines before the market opening Friday.

10 Best Defense Stocks To Buy For 2014: Implant Sciences Corp (IMSC)

Implant Sciences Corporation (Implant Sciences), incorporated in August 31,1984, develops, manufactures and sells sensors and systems for the security, safety and defense (SS&D) industries. Its technologies are used worldwide in security and inspection applications. Implant Sciences has developed technologies used in explosives trace detection (ETD), and and narcotics trace detection (NTD) applications and market and sell handheld ETD and benchtop ETD and NTD systems that use its technologies. The systems are used by private companies and Government agencies to screen baggage, cargo, vehicles, other objects and people for the detection of trace amounts of explosives. Implant Sciences have developed explosives detection systems designed for use in aviation and transportation security, high threat facilities and infrastructure, military installations, customs and border protection, and mail and cargo screening. The systems use the Quantum Sniffer technologies, including photon-based, non-radioactive ion source in combination with ion mobility spectrometry, a detection tool sensitive to the speeds with which ions of various substances move through the air to electronically detect minute quantities of explosives vapor and particles.

Quantum Sniffer QS-H150 Portable Explosives Detector

The Quantum Sniffer QS-H150 Portable Explosives Detector employs a vortex collector for the simultaneous detection of explosives particulates and vapors with or without physical contact and in real-time. The QS-HS150 can detect vapors and nanogram quantities of explosives particulates for explosives substances considered to be threats. The substances include military and commercial explosives, improvised and homemade explosives, and propellants and taggants.

The QS-H150 has automatic and continuous self-calibration. It monitors its environment, senses changes that would affect its accuracy, and re-calibrates accordingly. The system requires no user intervention and no calibration cons! umables. The detection process begins with the collection of a sample with its vortex collector. After collection, the sample is ionized photonically and analyzed using ion mobility spectrometer (IMS) technology. The presence of a threat substance is indicated by a visible and audible alarms. The threat substance is then identified and displayed on the integrated liquid crystal display (LCD) screen. When detecting a threat substance, the QS-H150 rapidly alarms. This real-time detection limits equipment contamination and allows for fast clear-down.

Quantum Sniffer QS-B220 Benchtop Explosives and Narcotics Detector

QS-B220 Benchtop Explosives and Narcotics Detector uses dual IMS with non-radioactive ionization for the detection and identification of a range of military, commercial, and improvised explosives as well as narcotics. The QS-B220 uses a sample trap which is wiped on the surface to be interrogated for explosives or narcotics particles.

The QS-B220 has automatic and continuous self-calibration. It monitors its environment, senses changes that would affect its accuracy, and re-calibrates accordingly.

Quantum Sniffer TM QS-Hx Portable Explosives Detector

The Company is focusing in developing a next-generation handheld detector that will use dual IMS non-radioactive ionization for the detection and identification of a range of military, commercial and improvised explosives, as well as narcotics. The QS-Hx will have automatic and continuous self-calibration, multi-level password-protected data security and will include a data management interface with data export to a network for recordkeeping, providing a link with the central command centers and logistics systems used by carriers.

Miniature Mass Spectrometer

The Company�� acquisition of Ion Metrics enabled it to obtain miniaturized quadrupole mass spectrometry (QMS) detector technology. The QMS detector is roughly the size of an AA battery and has low manufactur! ing costs! . When used in conjunction with an IMS, the QMS detector senses the molecular weight of the chemical species resulting in an orthogonal detection method in which a more fundamental characteristic of a substance is measured. It is developing interfaces for integrating the QMS detector into its future products.

Hyphenated Detectors

Depending on the application and the number of interfering background chemicals, it may be necessary to incorporate additional orthogonal detection methods. The combination of multiple sensors in series is known as employing hyphenated methods. By measuring different properties of the same species, interferents are separated from target species for a deterministic detection and identification and have minimum rates of false alarms. It is developing hyphenated systems employing conventional ion mobility, differential mobility and quadrupole mass spectrometry. As of June 30, 2012, it has one patent issued in real-time trace detection by IMS and QMS and two hyphenated system patents pending.

The Company competes with Morpho Detection, Inc., NucTech Company Limited and Smiths Detection, Inc.

Advisors' Opinion:

• [By James E. Brumley]

  It's not an uncompetitive market. Names like Implant Sciences Corporation (OTCMKTS:IMSC) and NXT-ID (OTCBB:NXTD) are battling in the security and facility-defense arena as well; IMSC makes explosives-detection and drug-detection hardware, while NXTD designs 3D image-rendering software that caters to the unique needs of prison security personnel, though the same technology has been proven in more traditional functions like building-security systems that keep certain people out rather than in. Neither Implant Sciences nor NXT-ID compete directly head-to-head with View Systems, however ... fortunately for them. See, VSYM is considered by some to be the best in the industry.

10 Best Defense Stocks To Buy For 2014: Cubic Corp (CUB)

Cubic Corporation (Cubic), incorporated on December 13, 1984, is an international provider of systems and solutions that address the mass transit and global defense markets. The Company operates in three segments: Cubic Transportation Systems (CTS), Mission Support Services (MSS) and Cubic Defense Systems (CDS). As of the September 30, 2012, the Company�� CTS business accounted for approximately 37%; MSS and CDS accounted for approximately 36% and 27% of its net sales respectively. CTS specialize in the design, development, production, installation, maintenance and operation of automated fare payment and revenue management infrastructure and technologies for transit operators. As part of its turnkey solutions, CTS also provides these customers with a suite of business process outsourcing (BPO) services and expertise, such as card and payment media management, central systems and application support, retail network management, passenger call centers and financial clearing and settlement support. In March 2014, the Company acquired Intific Inc.

Mission Support Services

MSS is a provider of live, virtual and constructive training services to all four branches of the United States military, including the special operations communities, as well as to allied nations. In addition, MSS offers a range of national security solutions to the intelligence community. CDS is a provider of air and ground combat training systems for the United States and allied nations and a key supplier of secure communications solutions, including asset tracking and cyber products and intelligence surveillance and reconnaissance (ISR) data links. Services provided include live, virtual and constructive training, real-world mission rehearsal exercises, professional military education, intelligence support, information technology, information assurance and related cyber support, development of military doctrine, consequence management, infrastructure protection and force protection, as well as support to f! ield operations, force deployment and redeployment and logistics.

Cubic Transportation Systems

CDS focuses on two primary lines of business: training systems and secure communications. CTS is a systems integrator that develops and provides fare collection infrastructure, services and technology for public transport authorities and operators worldwide. The Company offers fare collection devices, software, systems and multiagency, multimodal integration technologies, as well as a suite of operational services. As of September 30, 2012, the Company installed over 90,000 devices and deployed several central systems which in total process approximately 10 billion fare-related transactions per year for approximately seven billion transit passengers.

As of September 30, 2012, the Company had 400 projects in 40 markets on five continents. The Company has implements and, in many cases, operates automated fare payment and collection systems for some of the mass transit systems, such as London, the San Francisco Bay Area and the Los Angeles region. It offers a range of services for transit authorities in transit markets worldwide, including computer hosting services, call center and Web services, payment media issuance and distribution services, retail point of sale network management, payment processing, financial clearing and settlement, software application support and outsourced asset operations and maintenance. The Company provides its services in regions, including London, Sydney, Brisbane, Sweden, Washington district of Columbia, Los Angeles, San Francisco and Atlanta. CTS operate full service operation centers in North America, Europe and Australia. As of September 30, 2012, the Company was designing and building new systems in Chicago, Sydney and Vancouver.

Mission Support Services

MSS provides services within the scope of small-to large-scale military training exercises, including live, virtual and constructive training exercises and suppor! t. Traini! ng services include full life-cycle support from planning through after action reviews as well as the associated support, such as operational, technical and logistical support. In addition, the segment provides a broad range of national security solutions, including subject matter and operational expertise, advanced tactical training and cyber security services, to the intelligence, special operations, law enforcement and homeland security communities. Customers include all branches of the United States military, non-military agencies and allied nations under arrangements with the United States government. MSS is the prime contractor at more than 40 military training and support facilities and supports more than 200,000 exercises and training events per year.

The Company provides training and rehearsals for both small and large scale combat operations, training and preparation of military advisor teams, mobilization and demobilization of forces prior to and following deployment, combat and material development, military staff augmentation, information technology and information assurance, logistics and maintenance support for fielded and deployed systems, support to national security and special operations activities; peacekeeping; consequence management and humanitarian assistance operations worldwide. It plans, prepares, executes and documents realistic and focused mission rehearsal exercises (using both live and computer-based exercises) as final preparation of forces prior to deployment. In addition, it provides consultation and advisory services to the governments and militaries of allied nations.

The Company�� contracts include providing mission support services to three of the United States Army's CTC's: JRTC as prime contractor and the national training center (NTC) and Mission command training program (MCTP) as a principal subcontractor. These services include planning, executing and documenting realistic and stressful exercises and mission rehearsals that increase t! he readin! ess of both active and reserve the United States conventional and special operations forces by placing them in situations as close to actual combat as possible.

MSS is a principal member of the contractor team, to the United States armed services, that supports and helps manage and execute all aspects of the operations of the Joint Coalition Warfare Center (JCWC), including support to worldwide joint exercises and the development and fielding of the Joint National Training Capability (JNTC). Under the Marine Air Ground Task Force (MAGTF) Training Systems Support (MTSS) contract, it provides training and exercise support to the United States Marine Corps forces worldwide, including real-world mission rehearsals. It planned and executed virtually all Marine Corps simulation-based exercises worldwide under the original MAGTF Staff Training Program (MSTP) and its successor, the MTSS, directly preparing Marines for combat operations.

It provides training and professional military education support to the United States Army's Quartermaster Center and School, the Signal School and to the Transportation School. It also provides contractor maintenance and instructional support necessary to operate and maintain a wide variety of flight simulation and training systems and other facilities worldwide, for United States and allied forces under multiple long-term contracts, including direct support to USMC aircrew training systems worldwide. In addition, it provides a range of operational support to the United States Navy for Anti-Submarine Warfare (ASW) and counter-mine operations and training. It provides research, development and technical engineering (RDTE) support to the United States Air Force Research Laboratories (AFRL) for assistance in the identification and application of current, new and emerging technologies to proof-of-principle evaluations of advanced operational concepts. Its services, products and capabilities include development and deployment of curriculum and related cours! eware, co! mputer-based training, knowledge management and distribution, advanced distance learning (e-learning), serious military games for training, and other advanced education programs for United States and allied forces.

Cubic Defense Systems

CDS is focused on two primary lines of business: training systems and secure communications. This segment is primarily a diversified supplier of live and virtual military training systems and secure communications products to the DoD and more than 35 allied nations. The Company designs and manufactures air and ground combat training systems for fighter aircraft, armored vehicles and infantry, as well as weapons effects simulations, laser-based tactical and communication systems. The Company also designs and manufactures secure communications products focused on intelligence, surveillance, asset tracking and search and rescue.

The segment designs, manufactures and fields a range of technologies that are critical to combat readiness, supply chain logistics and national security for the United States and allied nations. Its primary lines of business include air combat training ranges and after action review software, ground combat training systems, including a full range of laser engagement simulation systems, virtual small arms training systems, intelligence, surveillance and reconnaissance (ISR) data links, personnel locator systems, multi-band communication tracking devices and cross domain appliances for cyber security. It also provides ongoing support services for systems it has built for several of its international customers.

Its training systems business designs and manufactures of instrumented training systems and products for militaries of allied nations. It designs and manufactures air and ground combat training systems for fighter aircraft, armored vehicles and infantry, as well as weapons effects simulations, laser-based tactical and communication systems. These systems collect and record simulated weapons eng! agements,! tactical actions and event data to evaluate combat effectiveness and lessons learned and provide a basis to develop after action reviews. It also designs and manufactures secure communications products focused on intelligence, surveillance, asset tracking and search and rescue.

Its training business is organized into air combat, ground combat and virtual training divisions. Ground combat training uses systems analogous to air ranges for ground force training. The systems are generally known as tactical engagement simulation systems or multiple integrated laser engagement system (MILES). It supplies MILES equipment as part of CTC contracts. Its Virtual Training product line provides virtual training systems for various applications, employing actual or realistic weapons and systems together with visual imagery to simulate battlefield environments. Cubic also provides maintenance trainers for combat systems and vehicles, as well as operational trainers for missiles, armored vehicles and naval applications.

Its communications business is a supplier of secure data links, radio frequency amplifiers, direction finding systems, remote video terminals, and search and rescue avionics for the United States military, government agencies, and allied nations. Personnel Locator System (PLS) is standard equipment on United States aircraft with a search and rescue mission. PLS is designed to interface with all modern search and rescue system standards. It also supplies amplifiers and direction finding systems to prime contractors and end users for both domestic and international applications. These include systems used by the Canadian Coast Guard, the United States Navy, the United States Air Force and the French Army.

The Company competes with Lockheed Martin, Northrop Grumman, General Dynamics, Boeing, L3 Communications and SAIC.

Advisors' Opinion:

• [By Rich Smith]

  The Department of Defense awarded San Diego-based Cubic Corporation (NYSE: CUB  ) a $19.9 million contract modification Friday, amending a previously awarded firm-fixed-price, foreign-military-sales contract in support of the Israeli military.

• [By Blake Bos]

  In the following video, Fool consumer-goods/industrials analyst Blake Bos breaks down Aviation Week's top aerospace and defense picks by annual revenue. His discussion includes Cubic (NYSE: CUB  ) , Rockwell Automation (NYSE: ROK  ) , Exelis (NYSE: XLS  ) , Boeing (NYSE: BA  ) , and Lockheed Martin (NYSE: LMT  ) .

• [By Lee Jackson]

  Cubic Corp. (NYSE: CUB) makes the list at J.P. Morgan. It has three major business segments. Cubic Transportation Systems is a leading integrator of payment and information technology and services for intelligent travel solutions. Cubic Defense Systems is a leading provider of realistic combat training systems and secure communications. Mission Support Services is a leading provider of training, operations, maintenance, technical and other support services for the United States and allied nations. Investors are paid a small 0.5% dividend. The J.P. Morgan price target is $57. The Thomson/First Call estimate is $56.20. The stock closed Tuesday at $52.51.