Is Huntington Ingalls Industries a Buy?

Huntington Ingalls Industries (NYSE: HII), usually about the closest thing to a value play among defense contractors, has enjoyed a breakout year thanks to increased talk about the need to expand the U.S. Navy. Even after the run-up, patient investors could do well climbing aboard at these levels.

The company is the rare modern defense contractor that is not diversified, and its core shipbuilding business is a very long-range endeavor with little chance for rapid growth. Huntington Ingalls, which was spun out of Northrop Grumman in 2011, through most of its history has traded at a price-to-earnings and price-to-sales discount to other defense contractors. That's still true today, though a flurry of talk about growing the U.S. Navy's fleet has helped the company's shares -- up 37% -- to outpace its defense rivals over the past year.

That expansion talk, unfortunately, seems overblown. But there are still good reasons to hope Huntington Ingalls can justify the increasingly optimistic outlook.

Source: Fool.com