Huntington Ingalls Provides Pure-Play Exposure to Long-Cycle Shipbuilding

Huntington Ingalls Industries is the largest independent military shipbuilder and generates revenue from almost all military shipbuilding contracts. Ships are the longest cycle defense product, as each ship takes years to manufacture and ships are typically purchased in blocks to reduce unit costs. The extended time required to build a ship means that funding for a project is difficult to cut and block purchases give contractors substantial visibility into the progression of revenue. Huntington Ingalls’ top line is, therefore, less sensitive to changes in the defense budget than peer contractors, making it a more defensive play among contractors.