The Worst Case Scenario for Defense Stocks

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This video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes and technology and media editor/analyst Andrew Tonner discuss topics across the investing world.

In today's edition, Brendan and Andrew discuss the worst case scenario for defense contractors: sequestration. If Congress fails to act, around $500 billion in automatic defense cuts will go into effect in January. That could be devastating for some defense contractors. In this video, Brendan talks about how it's looking increasingly likely that a deal to head off sequestration won't get done before 2013. He then goes in-depth about which contractors could be most exposed to this huge new round of defense cuts.

If sequestration does in fact happen, these contractors will likely look abroad for more revenues. But they're certainly not the only big American companies that are doing so. There are three companies whose international growth stories we're particularly bullish on. If the trend continues, investors could be looking at internationally fueled new stock highs. Uncover them in our special free report: "3 Companies Set to Dominate the World." The report won't be available forever, so we invite you to enjoy a free copy today. You can access it by clicking here. Enjoy, and Fool on!

At the time this article was published Andrew Tonner and Brendan Byrnes have no positions in the stocks mentioned above. The Motley Fool owns shares of General Dynamics, Lockheed Martin and Northrop Grumman. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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