Defense Stocks Are Heading Higher Says Citi

A Citigroup Inc. (NYSE:C) report released Sunday points to defense as an industry likely to outperform in the coming months. The report, entitled "Why defense stocks are heading higher," looks at Federal budget expectations, as well as fears surrounding it, along with other factors. The holistic analysis suggests that defense stocks are cheap, and now is the time to buy.

Jason Gursky, the analyst who authored the report, decided to change the methodology used to evaluate defense companies in this report. A previous analysis was based on a P/E multiple with a 15% discount to the...