General Dynamics Corporation
) subsidiary, National Steel and Shipbuilding Company (NASSCO),
has entered into a contract with an affiliate of American
Petroleum Tankers ("APT"). Per the deal, NASSCO will design and
construct four 50,000 deadweight ton liquefied natural gas
conversion-ready product carriers for APT. These carriers will
have a length of 610 feet.
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With a cargo capacity of 330,000 barrels, these tankers have
improved fuel efficiency. Being "ECO" designed, the tankers will
incorporate the latest environmental protection features.
Ecodesign products are made with a special consideration, taking
into account environmental impacts of the product during its
For example, these tankers have the Ballast Water Treatment
System. Ballast water discharges by ships can have a negative
impact on the marine environment. This treatment system prevents,
reduces or eliminates the transfer of aquatic invasive species
and pathogens through the control and treatment of the vessel's
ballast water and sediments.
The company expects to begin construction of the first tanker in
the third quarter of 2014 with first delivery to begin in the
fourth quarter of 2015 and continue through 2016. During the
construction period, the contract will add approximately 800 jobs
at NASSCO and more than 165 seagoing union jobs during the
operation of the vessels.
DSEC, a subsidiary of Daewoo Shipbuilding & Marine
Engineering (DSME) of Busan, South Korea will design the ship for
General Dynamics. This demonstrates the company's continued
partnership with Daewoo Shipbuilding. In Dec 2012, General
Dynamics had entered into a contract with TOTE, Inc., for the
design and construction of two 3,100 TEU LNG-powered
containerships. Daewoo Shipbuilding was contracted for the
designing of the ship.
General Dynamics is one of two contractors equipped to build
nuclear-powered submarines in the U.S. The company's revenue
exposure is spread over a broad portfolio of products and
services that will keep the overall growth momentum steady.
However, we remain concerned about the decline in order backlog,
given the threat of U.S. defense budget cuts. The company
presently retains a short-term Zacks Rank #3 (Hold).
However, stocks well positioned at the moment are
Erickson Air-Crane Inc.
Wesco Aircraft Holdings, Inc.
B/E Aerospace Inc.
). While Erickson Air-Crane carries a Zacks Rank #1 (Strong Buy),
Wesco Aircraft and B/E Aerospace hold a Zacks Rank #2 (Buy).