Full production of the F/A-22 would cost more than $20 billion over the next several years. Delaying that plane or one of the ships and subs on the Navy's drawing board could save billions of dollars a year, for which members of Congress could take credit.
There's less money involved in the electronic intelligence systems and services supplied by Argon, with revenue of a couple hundred million dollars a year, or CACI, which projects sales next year to be about $1.5 billion. There's less publicity potential, too, because some of what CACI and Argon do is so secret that most members of Congress don't know the details.
Northrop Grumman Corp., which owns the Newport News Shipbuilding yard in Virginia, stands to suffer if the growth of defense spending is slowed by Congress and the White House.
(Jeff Caplan -- Bloomberg News)
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Services and supplies for U.S. troops in Iraq and Afghanistan are not going to be cut from the Defense Department budget and spending on the war could increase, another reason there is less worry about the impact of budget cuts on many local firms.
No one, in fact, is talking about cutting the Pentagon budget. Proposals are simply to slow the growth of defense spending, which is projected to top $500 billion this fiscal year, including new money for Iraq that Congress will consider next month.
Learning from experience in Iraq and Afghanistan, the Pentagon is expected to reconsider its priorities next year. There is speculation that defense planners could shift away from a "platform-centric" approach that concentrates on capital-intensive ship and plane programs, toward spending for troops and modernized fighting, communications and electronic gear.
That would make it less attractive to invest in big prime contractors like Lockheed Martin and General Dynamics, whose stocks are already underperforming the smaller, faster-growing government contractors.
So far this year, all the cautious talk has not caught up to the big boys. Lockheed Martin stock, which closed Thursday at $58.94 a share, has gained 16.7 percent this year and General Dynamics is up 19.7 percent to $106.64. Lockheed pays an annual dividend of $1 and General Dynamics pays an annual dividend of $1.44, which makes them more attractive to some investors than the smaller defense firms, none of which pays a dividend.
Growth is the reason for buying stock in second-tier local firms. So far this year, the fastest growers, all traded on the Nasdaq Stock Market, have been Argon up 154 percent to $35.49, Essex Corp., a Columbia electronics company catering to the intelligence community, up 90 percent to $17.85 and SI International Inc., a Reston specialist in computer networks, up 60 percent. SI International stock closed Thursday at $31.25 a share after hitting a 52-week high of $32.66 during the day.
Also hitting a 52-week high for the year during Thursday's trading was CACI. Its shares traded as high as $68.97 and closed at $68.20, up 40 percent for the year.
United Defense Industries, which makes the Bradley fighting vehicle and other guns and missile launchers, is up 51 percent for the year at $48.08.
