Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Today we have a moderately speculative idea.: take stock of defense company Huntington Ingalls Industries (NYSE: HII), to capitalize on rising tensions between the US and China.

Growth potential and validity: 14,5% excluding dividends for 16 Months; 43% during 4 years excluding dividends; 9% per year for 14 years including dividends.

Why stocks can go up: the situation is always good for the company, а сейчас особенно.

How do we act: we take shares now by 193,63 $.

Подробный разбор бизнеса компании уже есть в Т⁠—⁠Ж, так что не будем повторяться.

When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.

No guarantees

Our reflections are based on the analysis of the company's business and the personal experience of our investors, but remember: not a fact, that the investment idea will work like this, as we expect. Everything, what we write, are forecasts and hypotheses, not a call to action. To rely on our reflections or not – it's up to you.

If you want to be the first to know, did the investment work?, subscribe: as soon as it becomes known, we will inform.

And what is there with the author's forecasts

Research, like this and this, talk about, that the accuracy of target price predictions is low. And that's ok: there are always too many surprises on the stock exchange and accurate forecasts are rarely realized. If the situation were reversed, then funds based on computer algorithms would show results better than people, but alas, they work worse.

So we're not trying to build complex models.. The profitability forecast in the article is the author's expectations. We specify this forecast for the landmark: as with the investment idea as a whole, readers decide for themselves, it is worth trusting the author and focusing on the forecast or not.

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Arguments in favor of the company

"Let's, tell her, because the night is short, how the devil unscrewed the horns of the sea. ". Для компании актуальны все плюсы из старой идеи, но есть и новые. Появилось большое военно-морское соглашение между США и Австралией, directed against the PRC. HII станет бенефициаром этой сделки с американской стороны как производитель подлодок и вообще поставщик услуг в этой сфере. Но даже если австралийские контракты компании не обломятся, хоть это и маловероятно, на руку ей все равно играют свежие тренды в американском флотостроении.

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Руководство американского ВМФ планирует увеличить расходы на строительство флота в ближайшие годы: in the average annual volume, costs will be 6,25% above, than originally planned. And by 2026, annual expenses will grow by 72% compared to the current level of spending. Understandably, what else should the US Congress approve, но денег флоту, probably, will give: противостояние с КНР — это стратегический проект для США и эффективным оно может быть лишь в случае, если США сохранят свое превосходство на море. Так что долгосрочная перспектива у HII стала еще лучше, what was.

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Somehow cheap. The company is inexpensive in absolute and relative numbers. Если сравнивать ее с конкурентами, то она выглядит гораздо дешевле в плане соотношения цены акции и выручки. P / HII's E is also below the "hospital average" - about 11.

Капитализация у компании не сильно большая — 7,77 млрд долларов. So I think, that HII shares will be easily pumped by a crowd of investors, которые зайдут в них потому, that "they are cheap".

Stability. Большую часть денег компания получает от правительства США, so what can you expect, that the stock will be packed with those who want to find stability in these unstable times. Это успешный бизнес с хорошими перспективами, стоит дешево даже по меркам свой отрасли, the flow of orders is stable here. А еще есть и пассивная доходность для сомневающихся.

Wrecked. The company pays 4,56 $ dividend per share per year, which gives approximately 2,53% per annum. It's not that crazy a lot., но гораздо больше среднего по S&P 500 c 1,28% per annum, что поможет нагнать в акции сторонников постулата «деньги должны работать». Considering all the points described above, эффект от набега дивидендных инвесторов может быть очень значительным.

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

What can get in the way

The company can start to expand. На фоне австралийских событий HII может начать агрессивно расширяться и, for example, will try to buy BWX Technologies. This will increase the debt burden of HII: задолженностей у компании на 6,065 млрд долларов, из которых 2,123 млрд нужно погасить в течение года.

Expenditure items. As a manufacturing enterprise, HII, probably, пострадает от роста расходов на сырье, работников и логистику.

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Payouts can cut. The company spends $ 184 million a year on dividends - approximately 24,53% from her profits for the past 12 Months. Certainly, the stability of the company's business greatly mitigates the risks of cutting payments, but, given the circumstances described above, выплаты могут порезать — и акции сильно упадут.

Huntington Ingalls Industries: how the company's business works, is it worth investing in stocks

What's the bottom line?

Shares can be taken now by 193,63 $ for pike. And then there are three options.:

  1. keep shares up to price 222 $. Столько за них просили еще в июне, so I think, here we will reach the goal in the next 16 Months;
  2. keep stocks up to their all-time high 277 $. Столько акции стоили в январе 2020, And, considering all the positive points, we can reach this level in the following 4 of the year;
  3. keep shares next 14 years.

А если вы выбрали долгосрочный путь инвестирования в HII, описанный в предыдущем издании этой идеи, now you can buy these shares.

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