Thursday, July 06, 2006

Defense Play: Big, Cheap And French

WASHINGTON, D.C. - Investing, internationally or otherwise, requires making contrarian calls now and then. Thales, a French defense and technology concern, looks like one such situation.

Thales' Paris-listed shares are down 25% from a 52-week high (a U.S.-listed depositary receipt is thinly traded over the counter and not sponsored by the company). By several measures of valuation, the stock looks cheap relative to industry averages for both European and North American aerospace and defense concerns.

It also looks reasonable relative to its own history. For example, it changes hands at 6.8 times cash flow (in the sense of net income plus depreciation and amortization). Over the last five years, the average is 8.8.

Full story at