Q: What's your opinion on the defense sector -- Boeing (BA ), Northrop Grumman (NOC ), United Defense Industries (UDI )?
A: We have a hold recommendation (3 STARS) currently on Boeing and believe it's fairly valued at its current price. Northrop Grumman we rank as a strong sell (1 STARS). And we believe that most defense contractors will be facing difficult budget constraints in coming years, given efforts by the government to cut debt. Also, we believe the changing warfare strategies may continue to restrain defense budget growth to 2% to 4% per year.