The U.S. Navy's second-largest builder of warships, General Dynamics Corp., inked a $1.27 billion in contract additions to continue work on one nuclear submarine and begin work on another. The deal is on top of a previous order to build five submarines for the Navy and is due to be completed by April 2014 according to the Defense Department. Northrop Grumman and General Dynamics each signed sub-building deals with the Navy in 1998. The submarines are 377 feet long, have four torpedo tubes and 12 vertical launch tubes, hold a crew of 134 and are both longer and lighter than earlier, Seawolf Class submarines.
• Sources: Bloomberg, Reuters, Business Week
• Related commentary: Defense Stocks Should Continue to Outperform in 2007 -- NY Times, General Dynamics Beats Street, Shares Fall, 9/11: Its Lasting Impact on the Economy and Defense Stocks, Build an Anti-Terrorism Portfolio to Protect Your Investments, Cramer's Take on GD
• Potentially impacted stocks and ETFs: General Dynamics Corp. (GD), Northrop Grumman Corporation (NOC). Competitors: Lockheed Martin Corporation (LMT), Raytheon (RTN), Boeing (BA). ETFs: iShares Dow Jones US Aerospace & Defense (ITA), PowerShares Aerospace & Defense (PPA)
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