GD - General Dynamics: Bet On Rising Geopolitical Volatility

2024-04-16 06:47:52 ET

Summary

• The geopolitical volatility keeps growing. The industries that benefit mainly are defense, energy, and shipping.
• General Dynamics is one of the only two US enterprises building nuclear submarines. Plus, the company owns the eponymous business jet manufacturer Gulfstream.
• GD keeps a prudent capital structure with 52% total debt to equity and 61% total debt to total liabilities.
• In 2023, GD delivered 7.3% revenue growth and declared a record-high backlog of $93.6 billion.
• GD is not a cheap stock but still offers upside potential at reasonable downside risk. I give GD a buy rating.

Thesis

Geopolitical volatility has been on the rise. The enterprises that thrive in such an environment are the shipping, energy, and defense industries. I have discussed shipping extensively in my articles. Now, it is time to venture into my two favorite industries: energy and defense. Today’s article discusses General Dynamics ( GD ), one of the major defense contractors in the US.

GD is one of two enterprises building nuclear-powered submarines for the US Navy (the other being Huntington Ingalls ( HII )). It also operates in the aerospace, combat systems, and technologies segments. The eponymous business jet manufacturer Gulfstream is also part of GD’s portfolio....

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