General Dynamics Will Creates Huge Revenue by 2026
Recommendation: Strong Buy
Target Price: $169.24
Current Long-Term Growth: 4.34%
General Dynamics Corp.’s GD electric Boat division recently secured an $869-million modification contract for providing designing and engineering support to the Columbia class fleet ballistic missile submarines (SSBNs). The deal also includes submarine industrial base development and expansion efforts supporting Columbia SSBNs and the nuclear shipbuilding enterprise (Virginia class and Ford class).
The deal is a joint U.S. and U.K. program that has been awarded by the naval sea Systems Command, Washington, D.C.
Furthermore, the deal entails electric Boat for the construction of SSBN 826 and SSBN 827 submarines. Work is scheduled to be completed by December 2031 and will be performed in Groton, CT; Quonset point, RI; and Newport News, VA, alongside other locations across the United States.
Importance of the Deal
The recently acquired contract will enhance cyber security measures alongside improving sub-tier vendor stability based on production economies for major components. This will subsequently facilitate in reducing risks related to the Columbia, Virginia and Ford class nuclear shipbuilding programs. Further, to support the increased demand associated with the U.S. Navy’s force structure assessment, the nuclear shipbuilding industrial base is significantly ramping up production capabilities. We believe that this contract, involving the expansion of the submarine industrial base, can duly go on to support the company’s production ramp-up plans.
What Favors General Dynamics?
The United States along with several other nations is strategically strengthening its naval power by upgrading missile submarines thanks to the rising worldwide geopolitical tensions. In this backdrop, General Dynamics enjoys a dominant position as a Navy contractor, as the demand for submarines remains high. In fact, the company is one of the only two contractors in the world equipped to build nuclear-powered submarines.
Furthermore, the fiscal 2021 defense budget proposal includes a spending provision of $4.4 billion specifically for Columbia-class submarines, reflecting a massive surge of 100% from the investments provisioned in the fiscal 2020 budget. Such a colossal budgetary amendment reflects solid growth prospects for the company in the days ahead.
Per a report by HEFFX, the global submarine market is predicted to see a 4% CAGR from 2020 to 2025. This means increased demand for different variants of submarines, as well as the Columbia-class ballistic missile submarines. As submarines are an important part of the U.S. navy fleets, General Dynamics is likely to benefit from such favorable market trends. These trends ought to also benefit other submarine manufacturers like Huntington Ingalls HII and MitsuBishi heavy Industries MHVYF around the world.
General Dynamics Corporation is a global aerospace and defense company.
The Company offers a portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; information technology (IT) services and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) solutions, and shipbuilding and ship repair.
It operates through four business groups: Aerospace, Combat Systems, Information Systems and Technology, and Marine Systems.
Its Aerospace group offers aircraft design; cockpit and cabin systems, and product service and support.
Its Combat Systems group offers combat vehicles, weapons systems and munitions.
The Information Systems and Technology group provides technologies, products and services in support of various programs.
The Marine Systems group is a designer and builder of nuclear-powered submarines, surface combatants and auxiliary and combat-logistics ships.
Shayne Heffernan Trade Idea
“Our current price target of General Dynamics will come in around $169.24 giving the stock a price increase of +14.89%.”
Overall, the bias in prices is: Downwards.
The projected upper bound is: 159.04.
The projected lower bound is: 136.12.
The projected closing price is: 147.58.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 20 white candles and 30 black candles for a net of 10 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 58.5586. This is not an overbought or oversold reading. The last signal was a buy 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 46.95. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 17 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -54. This is not a topping or bottoming area. The last signal was a buy 3 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 14 period(s) ago.
Rex Takasugi – TD Profile
GENERAL DYNAMICS closed up 0.160 at 147.300. Volume was 54% below average (consolidating) and Bollinger Bands were 32% narrower than normal.
Open High Low Close Volume 149.640 150.630 147.080 147.300 275,701
Technical Outlook Short Term: Neutral Intermediate Term: Bearish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 149.69 143.66 163.28 Volatility: 31 51 50 Volume: 585,518 500,109 498,309
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
GENERAL DYNAMICS is currently 9.8% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods.
Our volume indicators reflect volume flowing into and out of GD.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on GD.N and have had this outlook for the last 3 periods.
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