Raytheon (RTN) is the third largest defense contractor with a market capitalization of ~$57 billion and annual sales of $27 billion. The company focuses in the air defense missile space, advanced radar and threat detection, space systems for communication and sensing, and has exposure to other defense segments.

Raytheon is under-performing the benchmark ITA by 2% and this provides an opportunity to pick up shares at attractive levels. The company is likely to increase share repurchases and raise dividends as the defense budget is likely to expand further under a Trump administration. Sales have increased in the high single digits 5-7% and the company stands to benefit from US and foreign military spending increasing for air defense systems (Patriot) and other advanced weapons programs. The company announced the design and joint development of their Naval Strike Missile (NSM), which has the potential to turn into a multi-billion windfall for the company over the coming years. The NSM has the capability to be launched from Lockheed Martin's (LMT) Littoral Combat Ship as a defensive weapon against enemy naval vessels.

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