Defense Stocks to Protect Your Portfolio

With many of the budget issues conceivably coming to an end and the global economy finally strengthening, the defense biggies are expected to see stability in 2014. The $1.1 trillion Omnibus spending measure President Obama signed into law recently was a big relief for the Pentagon. The bill provides Pentagon with nearly $93 billion to buy weapons and another $63 billion for research and development.

Again, the latest improvement in the U.S. benchmarks with the U.S. Federal Reserve’s confirmation of continued stimulus cut brings some respite to the defense sector. The Fed said it will pare its bond-buying agenda by $10 billion for the second straight month that is expected to trigger optimism with a stronger greenback and softer import costs.

The Aerospace & Defense sector posted a stellar performance in 2013, braving issues like sequestration, budget cuts and cancellation of big-ticket programs. Many sector participants have boosted margins through cost-cutting initiatives, while others have beefed up international sales and focused on high-growth businesses like commercial aircraft that is independent of government spending.

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