2 No-Brainer Defense Stocks to Buy With $500 Right Now | The Motley Fool

The Cold War is long over. The peace dividend has been spent. Thirty-six years after the fall of the Berlin Wall, however, the world somehow feels more dangerous than ever before. There's conflict in the Middle East, border wars in Southeast Asia, artificial islands springing up across the South China Sea, and of course ... the largest land war in Europe since World War II continues to grind on. Think now might be a good time to invest in some defense stocks ? Well, so do I -- and apparently, so do a lot of people! For months, I've been warning that defense stocks are getting increasingly expensive as investors glom onto the global trend of growing military budgets. The good news is that, while defense stocks as a whole are getting pricey, there are still a few relative bargains to be found in this sector. If you have $500 available to invest, here are two that approach my self-defined standard of what constitutes a good price for a defense stock : Textron ( TXT 0.71%) and Huntington Ingalls ( HII 1.22%). Image source: Getty Images. Get to know Textron Textron may be less well-known than some of the larger defense contractors , but you almost certainly know some of its brands. The company's biggest division, Textron Aviation, produces Cessna and Beechcraft aircraft, for both civil and military customers. Similarly with Bell Helicopter, the company's second-largest division by revenue. In partnership with Boeing , Bell also builds the V-22 Osprey tiltrotor aircraft for the U.S. Marine Corps. On the ground, Textron Systems builds M1117 armored cars for the Army, LCAC 1000 hovercraft for the Navy, as well as the RIPSAW M5 robotic tank (developed by now-Textron subsidiary Howe & Howe). Priced at $15.8 billion in market capitalization, Textron stock sells for an unassuming 19 times trailing earnings. Although somewhat more expensive when valued on free cash flow (22.7 times FCF), the stock's price-to-sales ratio sits very close to my preferred one-times-sales valuation for U.S. defense stocks -- just under 1.1. Out of all the defense stocks I track, Textron is one of the two cheapest by this metric. NYSE: TXT Key Data Points Get to know Huntington Ingalls Slightly cheaper than Textron is Huntington Ingalls. And for those unfamiliar, Huntington is the former military shipbuilding arm of Northrop Grumman , which was spun off from the parent defense contractor in 2011 . The stock price is up 8-fold since its spinoff, by the way, despite its sales having barely doubled -- a good object lesson in the value of patience for Northrop and for investors alike. Huntington Ingalls today is one of the U.S. Navy's primary shipbuilders. It specializes in the construction of both nuclear-powered aircraft carriers and nuclear submarines, while also building an assortment of amphibious assault ships, destroyers, and cutters for the U.S. Coast Guard. So long as the South China Sea remains a focus of U.S. defense policy, the company can expect a steady flow of revenue...

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