Raytheon (NYSE: RTN) could give GE a run for its money in microwave ovens.
As reported earlier this week by
According to AW, Raytheon says the weapon -- which actually began testing in 2013, but was not revealed until last month -- has proven effective in shooting down "drone swarms over a wide area." Indeed, according to Raytheon, Phaser doesn't even have to target a specific drone to shoot it down. Rather, any object flying into the beam emitted by Phaser "will be destroyed."
From an effectiveness perspective, that's already impressive. But Phaser also promises to address the cost concerns of an Army facing tight budgets. A single MIM-104F Patriot PAC-3 missile (produced by Lockheed Martin, but fired from a Raytheon launch system) costs $3.4 million to produce. That's a lot of money to spend to shoot down a drone that might cost just a few tens of thousands of dollars.
Advances in laser technology already promise to cut that cost down to less than "
What it means to investors
In a world of
For one thing, it costs a lot less to generate the electricity to power a directed-energy weapon than it does to build an antiaircraft missile. For another, it costs money to ship, store, and carry a physical missile into battle. In contrast, the electricity needed to power a directed energy weapon is a "bullet" that can be generated on-site -- no logistics chain required.
To date, we've seen no signs of the Army awarding actual contracts to acquire Phasers for its forces. This, combined with Raytheon's silence on the weapon system's cost, makes it difficult to assign a value to this new product for investors in Raytheon stock. Still, the weapon's attractiveness to military logistics specialists is self-evident, and the potential for profit is clear.
At a P/E ratio of 19.4 and a P/S ratio of 1.8, Raytheon stock may look expensive today. But if it continues breaking barriers and inventing innovative weapons like this one -- weapons as cost-effective as they are just plain effective -- there's every reason to believe that Raytheon stock will keep on growing.
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