Massive Government Spending Cuts Will Increase Layoffs in the Defense Industry: Is it Time to Buy? An Exclusive Interview with Brian W. Ruttenbur, Managing Director from the CRT Capital Group

Wall Street Transcript

67 WALL STREET, New York - December 3, 2013 - The Wall Street Transcript has just published its Industrial Equipment, Aerospace and Defense Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Defense Budget Uncertainty - Capital Equipment Technology Investing - Growth Opportunities in Data Security - International Consumption Growth - Professional Security Equipment

Companies include: Lockheed Martin Corporation, OSI Systems, Inc., NICE Systems Ltd., General Dynamics Corp., and many others.

In the following excerpt from the Industrial Equipment, Aerospace and Defense Report, an experienced defense analyst discusses the outlook for the sector for investors:

...The other positive, frankly, is that in the near term most of these companies are going to have incredible cash flows, near record levels of cash flows. The cuts have not started yet and probably won't start to their full extent for another six to 12 months at least, so the cash flows in the near term are extremely strong.

TWST: Does anything stick out from the most recent quarterly earnings calls that we haven't covered already?

Mr. Ruttenbur: No, there was nothing new that came out in any of the conference calls recently that would change the trends.

TWST: Would you name a couple of your top stock picks?

Mr. Ruttenbur: OSI Systems (OSIS) is a company that about half their business and the majority of their growth comes from security equipment. That's X-ray inspection equipment; that division is under the name Rapiscan, and you'll recognize them from U.S. airports. They have about 50% market share in U.S. airports, but their big growth is international. They make large cargo inspection equipment for tractor trailers and for cargo containers, and they are in the process of taking over and screening all the cargo containers and tractor trailers entering Mexico. That's a $1 billion contract; that's large, and it's going to produce very large margins for them. They have already taken over the screening in Puerto Rico. There's going to be growth in that as countries look to secure their own ports and borders from drugs, currency and weapons trafficking.

I also like a company called NICE Systems (NICE). They do both video analytics and call center analytics and recording. That's an area that is primarily international. There's good solid growth for the company, and good, in fact great cash flows. They'll be generating $150 million a year of free cash flow...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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