President Obama has ordered 30,000 more troops to Afghanistan, and that means an increase in weapons, equipment and services to support them. Cramer on Thursday highlighted the companies most likely to win these government contracts and picked his top stock pick among them.
The most likely winner, Cramer said during Mad Money, will be Alliant Techsystems . This company makes good, old-fashioned bullets and other ammunition, used for both training and live combat. This Alliant division – ATK also sells a variety of aerospace and defense products – played a big part in the recent strong earnings report, and the troop surge “should make business even better,” Cramer said. A new $105 million add-on contract to supply the Afghan security forces with non-standard ammo won’t hurt either.
While ATK is Cramer’s favorite play on Afghanistan, there are a number of other stocks that might work, too. He endorsed tactical-radio maker Harris , which controls 42% of that market. ManTech International services vehicles used to clear routes of mines and improvised explosive devices, as well as mine-resistant vehicles such as those made by Oshkosh . MANT, down 17% for the year, has room to run, Cramer said, but not Oshkosh. That stock already is “well discovered.”
Investors also could consider American Science and Engineering and FLIR Systems , which make explosives detectors and infrared sensors. And there are private contractors, too, in the mix. Afghanistan seems to have been split between Fluor and DynCorp , the former covering the country’s north half while the latter operates in the south. Each company holds a $7.5 billion contract, but the business is a “much bigger deal for DynCorp,” Cramer said. The company’s a pure-play private military contractor, while Fluor is a much larger global infrastructure name.
There are many plays on the increased troop deployment to Afghanistan, Cramer said, but “the best way is … Alliant Tech.”
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