Many reasons have been put forth as to why global financial markets continue to be in turmoil but this week showed there may be no end in sight to this period of volatility that has carried over into early 2016 from the last half of 2015.
Executive Mosaic’s GovCon Index of 30 large, publicly-traded government contractors has not been immune from the wild swings spurred by investor worries over a global slowdown, deep plunges in commodities like oil and new concerns over monetary policies by central banks worldwide.
The GovCon Index ended Thursday at an 11-percent decline from the year’s start and the S&P 500 — which contains 11 Index stocks — also crossed the 10-percent down barrier on a year-to-date basis.
Short-term thinking of traders may dominate current market action but investors playing the long game have theoverall trajectory on their side as the S&P 500 climbed 85 percent between 2010 and 2015.
From 2013 to 2015, the composite index rose 43 percent.
And as discussed here previously, some analysts believe defense stocks can be a safety net as they are relatively more sheltered from headwinds of currency fluctuations and economic slowdowns compared to other sectors.
EM’s 2016 Wash100 class of inductees includes three CEOs from America’s “Big Five” publicly-traded government contractors who have helped to steer their companies to consistent financial results that not only “Beat the Street” but help generate returns of capital to shareholders.
Marillyn Hewson and Phebe Novakovic respectively took the helm at Lockheed Martin and General Dynamics in January 2013 and both companies have since recorded year-to-year increases in earnings per share, profit and revenue in all three years since they started in their chief executive roles.
Shares in Lockheed climbed 161 percent and General Dynamics’ stock doubled over that period.
Wes Bush has led Northrop Grumman as chief executive since January 2010 and emphasized shareholder value as a major cornerstone of the company’s business plan.
Over his six-year tenure, earnings per share have climbed 62 percent and the stock price has trebled.
In the words of Wealth Wire Managing Editor and frequent CNBC guest Jimmy Mengel: “If you want a defensive portfolio, you can do worse than this collection of defense stocks.”
THE WEEK’S TOP GOVCON STORIES