Portable Alpha Daily: Ceradyne and Aeroflex

President Bush is scheduled to address the nation this week and spell out a new strategy for the war in

Iraq

, which might include a surge in troop deployment of 20,000. This might be an opportunity for investors looking for long positions to allocate into companies specializing in armor / military equipment.

One of my favorite companies is Ceradyne Inc. (CRDN 11/1/06), which is listed below as one of our top “buy” recommended companies. Ceradyne, Inc. specializes in the development, manufacturing, and marketing of technical ceramic products, powders, and components for defense, industrial, automotive/diesel, and commercial applications in the United States. Aside from the domestic operations, the company’s products are used to in lightweight ceramic armor for soldiers and other military applications.

I first listed Ceradyne as a "buy" recommended stock back on November 8^th, one week after its initial “buy” recommendation on November 1^st. An anonymous viewer questioned the sustainability of Ceradyne assuming a reduction in U.S. troop deployment. In and of itself, the question is valid, but the viewer was a bit pre-mature in his time frame and didn’t appreciate the diversity of operations at Ceradyne. In fact, the stock is up 24.61% since our initial “buy” recommendation and 15.07% since the post.

Aside from Ceradyne, another “buy” recommended company worthy of examination is Aeroflex Inc. (ARXX 1/3/07). The company engages in the design, engineering, and manufacture of microelectronic and test solutions to the broadband communications, aerospace, and defense markets. It was recently upgraded to “buy” recommendation status, and well below levels seen last spring, similar to CRDN back in November. It’s also fairly diversified, with operations spanning both the telecom sector, which I like for 2007, and aerospace / defense.