Lawrence Harris, analyst at CL King & Associates, reiterated a strong buy on Harris Corporation. (NYSE: HRS). Harris Corporation is the world’s largest supplier of ground based tactical radios for the military.

Harris also is a major supplier of transmitters and video infrastructure equipment for the broadcasting industry. The recent announcement of an increase in American troops serving at Afghanistan is expected to impact Harris Corporation positively. The radio business accounts for nearly 50% of Harris' operating margins. Past history adds credibility to the analysis.

Harris revenues from the tactical radio business grew nearly 20% in 2007 during a similar surge of American troops in Iraq. Harris also has an added advantage – the US Marine Corps have been standardized on Harris radios. Harris' annual revenues is close to $5.1 Billion.

"Technology stocks are helping drive the stock market higher; in our view, one under-the-radar quality technology issue is defense industry player Harris Corp. (NYSE: HRS)," says Brandon Clay.

In his Invest with an Edge, he observes, "Harris is proving a tech company doesn't need to do anything flashy to generate flashy returns."

"At its core, Florida-based Harris is an information technology company. Admittedly, this is a stodgy area in the tech world, but don't let that deter you.

"There’s a lot to like with Harris. For instance, the U.S. government is one of the company's biggest customers. 

"Companies that rely on Uncle Sam for the bulk of their sales and profits, as does Harris, have predictable revenue streams. They’re often able to weather economic downturns more easily than other companies.

"Harris designs and builds communications technology used by the U.S. military. Given that the U.S. is involved in two armed conflicts with no end in sight, demand should remain steady for the company's products.

"Harris recently reported a 12% drop in fiscal first-quarter earnings, but sales climbed by almost 3%. That is significant.  Unlike many companies that spent the better part of 2009 cutting costs, Harris is showing top-line growth.

"More importantly, Harris offered robust full-year guidance. They expect to earn $3.85-$3.95 a share on sales of $5.1-$5.2 billion, topping previous estimates.

"The company landed a combined $286.5 million in new contracts from the State Department and U.S. Navy on the same day in late October. Two weeks before that, Harris acquired a $419 million contract from the U.S. Army.  In August, Harris won a $10 million contract from the U.S. Air Force.

"The bottom line is that it is clear Uncle Sam is a big Harris customer, and that's good news for Harris shareholders. I think they will deliver on the higher guidance.

"Harris has more than $231 million in cash at the end of the most recent quarter and raised its quarterly dividend by 10% to 22 cents a share.

"This company is proving a tech company doesn't need to do anything flashy to generate flashy returns. To go with a solid defense contractor in the hot tech sector, buy HRS."

Rewarding Shareholders with Outstanding Income

The company recently declared a quarterly dividend of 21 cents per share, which translates into an industry-leading yield of 2.4%.

The dividend is payable December 1 to shareholders of record November 20.

Solid Earnings

In late October, the company reported third-quarter earnings of 42 cents per share, exceeding the Zacks Consensus Estimate by 8%. Revenue slipped 4% year-over-year but was up 7% on a local-currency basis.

Higher Forecasts and Strong Momentum

The company is seeing bullish earnings estimates on the strong quarter. The full-year Zacks Consensus Estimate of $1.70 per share is up 4 cents over the past 30 days.

For 2010, analysts polled by Zacks are projecting earnings of $2.17 per share, versus last month's $2.11.

The share price, which is very close to a 52-week high, has seen strong momentum, outpacing the market by about 40% during the past year.

Favorable Industry Comparisons

Avon boasts a return on equity (ROE) of 87%, dwarfing the industry average of 11%. The company's net profit margin of 6% compares to an industry average of 3%.

Read the Oct 20 commentary on AVP.

Last Week's Growth and Income Zacks Rank Buy Stocks

Polaris Industries Inc. (PII) recently declared a quarterly dividend of 39 cents per share, which translates into an industry-leading yield of 3.4%. In mid-October, the company announced third-quarter earnings of 94 cents per share, which was below the previous year's $1.13 but 12% ahead of the Zacks Consensus Estimate. Read the whole story on PII.

Phillips-Van Heusen Corp. (PVH) is seeing higher forecasts ahead of reporting third-quarter results next week. The full-year Zacks Consensus Estimate of $2.49 per share was increased from last month's $2.46. Read the whole story on PVH.

Harris Corporation (HRS) recently posted fiscal first-quarter earnings of 83 cents per share, topping the Zacks Consensus Estimate by 9%. The company also hiked its earnings guidance and analysts followed suit. Read the whole story on HRS.

Syntel (SYNT) recently declared a regular quarterly dividend of 6 cents per share, which translates into an industry-leading yield of 0.6%. The company also reported third-quarter earnings of 73 cents per share, eclipsing last year's 54 cents and topping the Zacks Consensus Estimate by 24%. Read the whole story on SYNT.

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