Market Overview - U.S. stock markets ended positively with the Nasdaq Composite, Dow Jones Industrial Average, and S&P 500 gaining 1.18%, 1.08%, and 0.93% respectively despite mid-week volatility [1] - Market direction was influenced by U.S. policy developments regarding Venezuela, enthusiasm for AI-linked technology stocks, and mixed economic data [1] Economic Indicators - The manufacturing Purchasing Managers' Index (PMI) fell to 47.9 in December 2025, the lowest since October 2024, indicating contraction [2] - Conversely, the Services PMI unexpectedly rose to 54.4 in December from 52.6 in the previous month, indicating expansion [2] - Nonfarm Payrolls increased by 50,000 jobs in December, below expectations, while the unemployment rate slightly declined to 4.4% from 4.5% in November [2] - Average Hourly Earnings increased by 3.8% year-over-year, up from 3.6% in November [2] Stock Performance - Indivior PLC shares rose 21.7% since being upgraded to Zacks Rank 1 (Strong Buy) on October 31, outperforming the S&P 500's 2% increase [4] - FormFactor, Inc. shares increased by 15.9% since its upgrade to Zacks Rank 2 (Buy) on October 31, also outperforming the S&P 500 [5] - An equal-weight portfolio of Zacks Rank 1 stocks outperformed the equal-weight S&P 500 index by 7 percentage points, returning +17.81% compared to +10.85% for the index [5] Focus List and Model Portfolios - The Zacks Focus List portfolio returned +22.1% in 2025, outperforming the S&P 500 index's +17.9% gain [12] - The Focus List has consistently outperformed the S&P 500 over various time frames, including a +22.1% return in the last year compared to +17.9% for the index [14] - The Earnings Certain Admiral Portfolio (ECAP) returned -1.67% in 2025, underperforming the S&P 500's +17.9% gain [15] - The Earnings Certain Dividend Portfolio (ECDP) returned -0.6% in 2025, also underperforming compared to the S&P 500 [19] Notable Stock Recommendations - FIGS, Inc. shares surged 56.8% since being upgraded to Outperform on November 7, significantly outperforming the S&P 500's 3.5% increase [8] - Five Below, Inc. shares increased by 21.7% since its upgrade on October 29, again outperforming the S&P 500 [8] - Mettler-Toledo International Inc. and Accenture plc saw returns of 16.6% and 16.5% respectively over the past 12 weeks [14]

Core Insights - HII has doubled the size of its unmanned facility in Portchester, U.K., enhancing its presence and capacity to support the U.K. Royal Navy and European partners operating the REMUS line of unmanned underwater vehicles (UUVs) [1][7] Group 1: Facility Expansion and Capabilities - The expanded Portchester facility will serve as a European hub for HII's Mission Technologies division, providing operational, technical, and logistics support for U.S. combatant commands and allied missions [2] - The facility will also prepare for the deployment and sustainment of HII's ROMULUS family of unmanned surface vessels (USVs), which are scheduled for availability in 2026 [3] - The site will drive new jobs and support supplier engagement, maintenance, training, and long-term sustainment for operators across the U.K. and Europe [7] Group 2: Unmanned Systems Overview - HII's unmanned platforms are recognized for their modular design, long endurance, and reliable field performance, supporting various missions including mine countermeasures and environmental monitoring [4] - The REMUS family of UUVs is the world's leading UUV, known for its open-architecture design that allows for rapid integration of new payloads and mission-specific configurations [9] - More than 90% of REMUS units delivered over the past 23 years remain in service, highlighting the platform's durability and lifecycle value [13] Group 3: Partnerships and Contracts - HII signed a memorandum of understanding with Babcock International Group to integrate REMUS vehicles with Babcock's submarine Weapon Handling and Launch Systems, enhancing undersea capabilities for allied navies [10] - The Royal Navy has a long-standing partnership with REMUS, having acquired various models for mine countermeasure operations, with recent orders reflecting confidence in HII's systems [11] Group 4: Specific Product Features - The ROMULUS family of USVs is powered by the Odyssey Autonomous Control System and is designed for global mission deployment and extended autonomous operations [15][16] - The REMUS line includes several variants optimized for different mission sets, with capabilities ranging from shallow-water operations to deep-sea recovery [17]

Core Viewpoint - Huntington Ingalls (HII) shares experienced a significant increase of 6.2% in the last trading session, closing at $378.47, driven by strong trading volume and positive market sentiment regarding U.S. defense spending [1][2]. Company Overview - Huntington Ingalls is a leading industrial employer in Virginia and the only designer and manufacturer of nuclear-powered aircraft carriers in the U.S. Over 70% of the active U.S. Navy fleet consists of ships built by Huntington Ingalls [1]. Market Expectations - The rise in HII's stock is attributed to investor expectations of a sharply higher U.S. defense budget, with President Trump proposing military spending to increase to approximately $1.5 trillion by 2027, up from $901 billion in 2026. This has led to a positive market reaction, boosting defense stocks on the anticipation of stronger long-term earnings growth [2]. Earnings Projections - Huntington Ingalls is projected to report quarterly earnings of $3.75 per share, reflecting a year-over-year increase of 19.1%. Revenue is expected to reach $3.05 billion, marking a 1.6% increase from the same quarter last year [3]. Earnings Estimate Revisions - The consensus EPS estimate for Huntington Ingalls has been revised 1.7% higher in the last 30 days, indicating a positive trend in earnings estimate revisions, which typically correlates with stock price appreciation [4]. Industry Context - Huntington Ingalls operates within the Zacks Aerospace - Defense industry, where another company, GE Aerospace, saw its stock close 2.8% lower at $314.44, despite a 14.1% return over the past month [4].

Core Insights - Defense contractors' shares surged following President Trump's proposal to significantly increase the military budget to $1.5 trillion for 2027, up from $1 trillion [1][6] Group 1: Stock Performance - Shares of Lockheed Martin (LMT), Huntington Ingalls (HII), and L3 Harris (LHX) rose over 7%, leading gains in the S&P 500 index [2] - General Dynamics (GD) and Northrop Grumman (NOC) saw increases of more than 4%, while RTX Corp. (RTX) gained 2% [2] Group 2: Budget Details - The Department of Defense had a budget of $850 billion in fiscal 2025, which was an increase of $34 billion from the previous year [3] - The White House proposed an increase of over $113 billion for the fiscal 2026 defense budget [3] - Trump's proposed budget represents a roughly 50% increase from the current budget levels [3] Group 3: Market Reactions - The gains in defense stocks on Thursday reversed losses from the previous day, when Trump criticized companies for spending on stock buybacks and dividends instead of enhancing manufacturing processes [4]

Core Insights - HII hosted key Navy leaders to discuss the role of Ingalls Shipbuilding in delivering advanced surface combatants for the U.S. Navy's "Golden Fleet" initiative [1][6] Group 1: Company Initiatives - HII is actively investing in its shipyards to meet the urgent demand for naval ships, focusing on expanding capacity, enhancing workforce retention, and improving shipbuilder proficiency [3][8] - The company has invested over $1 billion in infrastructure and advanced toolsets at Ingalls Shipbuilding to prepare for next-generation capabilities [8] Group 2: Strategic Partnerships - Ingalls Shipbuilding is involved in early engineering and design discussions for the Navy's next battleship and has been selected to design and construct the future small surface combatant (SSC) platform [5] - HII is collaborating with Navy leadership to align its engineering and manufacturing capabilities with the Navy's long-term operational needs [7] Group 3: Workforce and Commitment - The shipbuilders at Ingalls Shipbuilding are recognized for their critical role in national security, with leaders emphasizing the importance of their skills and commitment to excellence [2][6] - HII's workforce, which numbers 44,000, is essential in building the Navy's capabilities and ensuring maritime dominance [10]

Core Insights - HII hosted Secretary of War Pete Hegseth at its Newport News Shipbuilding division as part of his "Arsenal of Freedom" industry tour, emphasizing the critical role of shipbuilders in national defense [1][4] Group 1: Company Operations - HII is focused on increasing shipbuilding throughput and has implemented a distributed shipbuilding initiative by partnering with 23 shipyards and fabricators to improve schedule adherence [5] - The company has modified shifts to support a 56-hour standard work week to enhance productivity and meet increased demand for ships [6] - HII's workforce consists of 44,000 employees, making it the largest industrial employer in Virginia and Mississippi [6] Group 2: Technological Advancements - During the visit, Hegseth observed how HII is leveraging technology and state-of-the-art facilities for serial-module production of Columbia- and Virginia-class submarines [4] - HII is the largest producer of unmanned underwater vehicles for the U.S. Navy and the world, showcasing its commitment to advanced defense capabilities [6][8] Group 3: Strategic Goals - HII aims to build on its momentum in 2026 by improving operations and efficiency, which translates directly into enhanced capabilities for the Navy [4] - The company is exploring partnerships with international manufacturers to expand capacity, including the potential addition of another shipyard in the U.S. [5]

Core Viewpoint - Shares of defense companies Lockheed Martin Corp (LMT) and Huntington Ingalls Industries Inc (HII) have risen following the U.S. attack on Venezuela and the capture of leader Nicolás Maduro, with Wall Street betting on limited geopolitical escalation [1] Group 1: Stock Performance - LMT shares increased by 2.1%, trading at $507.57, with a 17.7% gain over the past nine months, bouncing off the $480 support level [2] - HII shares rose by 4%, trading at $363.86, reaching a record high of $365.92, and achieving an 80% gain for 2025, marking its best annual performance since 2013, with over 98% increase in the last nine months [3] Group 2: Options Activity - Both LMT and HII are experiencing unusual options activity, with LMT seeing double the typical call volume and HII seeing triple [4][5] - The most active options for LMT is the weekly 1/9 500-strike put, while for HII, it is the June 460 call, with new positions being opened in both [4][5]

Company Overview - Huntington Ingalls Industries, Inc. (NYSE:HII) is one of the largest shipbuilding companies in America, known for constructing notable ships such as the Gerald R. Ford class aircraft carriers [2]. Stock Performance - The shares of Huntington Ingalls Industries, Inc. have increased by 82% year-to-date [2]. - Citigroup initiated coverage of the stock with a Buy rating and set a price target of $376 per share [2]. - Bernstein raised its price target for the stock from $305 to $362 while maintaining a Market Perform rating [2]. Financial Performance - In the third quarter, Huntington Ingalls Industries, Inc. reported a 16% annual growth in revenue and a 44% decline in diluted earnings [2].

Core Insights - Huntington Ingalls Industries Inc. (HII) has secured a contract worth nearly $97.7 million for long-lead materials to support the refueling and complex overhaul of the USS Harry S. Truman (CVN 75) aircraft carrier, with completion expected by September 2026 [1][9] Company Overview - HII's Newport News Shipbuilding unit has constructed over 31 aircraft carriers for the U.S. Navy since 1933, including all 10 Nimitz-class carriers currently in service and the first Gerald R. Ford-class carrier [3][9] - The company is actively developing the next-generation Gerald R. Ford-class aircraft carriers, leveraging decades of naval shipbuilding experience to secure a consistent flow of contracts, which supports strong revenue growth prospects [4] Industry Context - The global naval defense sector is witnessing increased investments in naval capabilities, particularly in aircraft carriers, due to rising geopolitical tensions [5] - The aircraft carrier ship market is projected to grow at a CAGR of 12.75% from 2025 to 2030, which is expected to benefit HII as the largest shipbuilder and sole manufacturer of aircraft carriers in the U.S. [6] Competitor Insights - RTX Corporation (RTX) is positioned to benefit from the expanding market, with a long-term earnings growth rate of 10.21% and a projected sales increase of 7.8% for 2025 [6][7] - BAE Systems plc (BAESY) has a long-term earnings growth rate of 14.57% and is expected to see a significant sales rise of 63.3% in 2025 [7][8] - Lockheed Martin Corp. (LMT) has a long-term earnings growth rate of 11.94% and anticipates a 4.8% increase in sales for 2025 [8][10] Stock Performance - HII shares have increased by 38% over the past six months, outperforming the industry growth of 14.1% [11]

Core Insights - Huntington Ingalls Industries Inc. (HII) has delivered the Arleigh Burke-class guided missile destroyer Ted Stevens (DDG 128) to the U.S. Navy, marking the second Flight III destroyer delivered by Ingalls Shipbuilding [1][10] Company Overview - HII is a leading naval defense contractor, specializing in the design, construction, and maintenance of naval vessels, including guided missile destroyers and amphibious ships for the U.S. Navy and Coast Guard [2][3] Product Details - The Arleigh Burke-class destroyers are advanced, multi-mission platforms capable of supporting various military operations, including peacetime operations, crisis response, sea control, and power projection [4][10] - Ingalls Shipbuilding has delivered a total of 36 Arleigh Burke-class destroyers to the U.S. Navy, including the first Flight III vessel, USS Jack H. Lucas (DDG 125) [4] Market Opportunities - Rising geopolitical tensions and territorial disputes are driving nations to enhance their naval capabilities, leading to increased spending on naval warships [5] - The global naval vessels and surface combatant market is projected to grow at a CAGR of 5.6% from 2025 to 2030, which is favorable for HII's diverse portfolio of guided missile destroyers [5] Competitor Insights - General Dynamics Corporation (GD) has a long-term earnings growth rate of 13.07%, with a Zacks Consensus Estimate for 2025 sales at $51.97 billion, indicating an 8.9% increase [6][7] - BAE Systems plc (BAESY) has a long-term earnings growth rate of 14.57%, with a Zacks Consensus Estimate for 2025 sales at $40.79 billion, suggesting a significant rise of 63.3% [8][9] - Lockheed Martin Corp. (LMT) has a long-term earnings growth rate of 11.94%, with a Zacks Consensus Estimate for 2025 sales at $74.44 billion, reflecting a 4.8% increase [11] Stock Performance - Over the past six months, HII shares have increased by 40.4%, outperforming the industry average rise of 14.6% [12]