General Dynamics (GD)

I purchased General Dynamics on October 12th, 2020. I still hold it.

This is my write up from October 12th, 2020. Like my purchase of Charles Schwab at the same time, this is when I first began a quality-focus in my investment process. I’m up 70% on the purchase excluding dividends. I still think General Dynamics is a high quality company. I still hold the position even though the valuation has become stretched beyond where I originally purchased it.

Much like my Charles Schwab article, this is when I was first getting into quality investing before I had fully fleshed out my current checklist & process. Regardless, I think that the logic behind the purchase holds up well.

Key Statistics

Price/Earnings = 12.6

Price/Sales = 1.1

EV/EBIT = 12.6

Debt/Equity = 119%

Return on Equity = 27.5%

Company

General Dynamics is a 121 year old defense contractor and private jet manufacturer. They have manufactured US military staples such as the M1 Abrams tank. They are also the original designer of the iconic F-16 fighter jet.

The US government is their biggest customer and most of their business is locked-in via long term contracts.

Not only do they have ongoing contracts to build new hardware for the United States government, but they are also responsible for the ongoing maintenance of the US arsenal. That’s about as steady a stream of business as you can get in this world.