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Huntington Ingalls Industries, Inc. (HII - Snapshot Report) announced its takeover of The S.M. Stoller Corporation – the consulting and engineering services provider to the federal government and private sector. The financial terms of the transaction were not disclosed.

Stoller is a privately held company which has given environmental and technical support to the U.S. government and nuclear power industry for over 54 years. Its operations span 29 states across the U.S. with services ranging from managing environmental issues, to highly complex multi-year remediation projects and short-term evaluation of local groundwater quality in anticipation of commercial construction.

With this acquisition, Stoller will be part of Huntington Ingalls’ Newport News Shipbuilding (NNS) division. Hence, this strategic move will position NNS to enhance its territory within the DOE, environmental management and commercial nuclear services arenas.

Huntington Ingalls’ NNS unit designs, builds and refuels nuclear-powered aircraft carriers and also provides fleet services for naval ships. Of late, it has been proactive in expanding its nuclear and manufacturing expertise to the Department of Energy and alternative energy business ventures. Its shipyards are also capable of designing and building nuclear-powered submarines.

Huntington Ingalls ended the third quarter of 2013 with a 46.25% positive surprise driven by solid program execution at Ingalls Shipbuilding and Newport News Shipbuilding while it posted a 25.63% positive surprise over the last four quarters on average.

The budget sequester that went into effect at the start of Mar 2013 has a direct bearing on the U.S. government's defense spending and is a function of the country's fiscal and economic challenges. The third-quarter earnings season stood testament to the bullish trend in the defense sphere, defying sequestration and budget cut woes.

Undeterred by defense budget cuts, the big defense operators are expanding their operations through acquisitions. Moreover, they are busy restructuring their businesses. Also, they are keeping themselves busy on the technological front with new products countering competition.

Huntington Ingalls presently carries a Zacks Rank #2 (Buy). Other stocks from the sector that are also presently performing well include Alliant Techsystems Inc. (ATK - Analyst Report), Lockheed Martin Corp. (LMT - Analyst Report) and Northrop Grumman Corp. (NOC - Analyst Report), all with a Zacks Rank #2 (Buy).

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