The 2013 All-America Research Team: Aerospace & Defense Electronics, No. 2: Douglas Harned

After two years at No. 3, Douglas Harned of Sanford C. Bernstein & Co. reclaims second place. “Doug made us a lot of money,” states one grateful client. In June 2012, Harned upgraded Boeing Co. from market perform to outperform, at $68. He reasoned that the operational and other difficulties with the Chicago-based airplane manufacturer’s 787 Dreamliner aircraft were already priced into the shares. Through August 2013, Boeing soared 52.8 percent, to $103.92, pacing the sector’s 39.2 percent gain. Another favorite is Huntington Ingalls Industries, a Newport News, Virginia–based military shipbuilder that Harned has rated outperform since initiating coverage in June 2011, at $35.51, largely on the expectation of margin improvements at its Gulf Coast Navy shipyards. In the 12 month through August, the shares rallied 60.8 percent, from $39.37 to $63.32, and bested the sector by 27.1 percentage points. “These stocks can still work as long as they continue to generate large amounts of free cash flow,” Harned concludes. — Ben Mattlin