The new year is here, and so is my monthly $1,500 stock-buying ritual. For January, I’ve got my sights on General Dynamics (Ticker: GD)—a company that blends solid fundamentals with growth potential. It’s not a meme stock, it’s not a moonshot, and it’s definitely not about to double overnight. But for a dependable, long-term investment? GD is ticking all the right boxes. Plus the Western Free World needs more and better weapons to defend itself from growing menaces.

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Why General Dynamics?

Let’s talk numbers, because that’s where GD really shines.

1. A Valuation That’s Reasonable (for Once)

• Trailing P/E: 19.66
• Forward P/E: 16.16

In a market where even mediocre stocks are trading at sky-high valuations, GD feels refreshingly down-to-earth. A forward P/E of 16.16 suggests this isn’t just a defensive play—it’s a company with room to grow.

2. Price-to-Sales That Doesn’t Make Me Wince

• Price/Sales Ratio: 1.54

For context, some tech darlings are sporting Price/Sales ratios in the double digits. GD, on the other hand, is sitting comfortably at 1.54—a very reasonable number for a company generating $46.05 billion in revenue over the past year.

3. Better Growth Than Its Biggest Competitor

General Dynamics isn’t just keeping up with its peers; it’s outperforming them.

• Quarterly Revenue Growth (YoY): 10.40%
• Competitor (LMT) Quarterly Revenue Growth (YoY): 1.30%

This kind of growth in a mature industry like defense is impressive. While Lockheed Martin (LMT) is practically standing still, GD is picking up speed.

4. Debt That Won’t Keep Me Up at Night

Debt is par for the course in the defense sector, but GD’s balance sheet is in much better shape than its rival:

• Total Debt/Equity (mrq): 48.61% (versus LMT’s eye-watering 268.35%).
• Total Debt (mrq): $11.17 billion—a manageable figure given their revenue (ttm) of $46.05 billion.

GD’s debt levels feel like a well-serviced mortgage, while LMT’s are more like a high-interest credit card.

5. Growth at a Fair Price (PEG Ratio)

• GD PEG Ratio (5yr expected): 1.49
• LMT PEG Ratio (5yr expected): 3.81

A PEG ratio under 2 is usually a good sign—it means you’re getting growth at a fair price. By this measure, GD isn’t just a solid investment; it’s a bargain compared to Lockheed Martin.

6. Reliable Dividends

• Trailing Annual Dividend Yield: 2.16%
• Forward Annual Dividend Yield: 2.20%

It’s not life-changing money, but GD’s dividend is dependable, and a slight increase in the forward yield suggests they’re committed to rewarding shareholders.

The “Free Stock Strategy” Explained: How I Turn Investments into Free Shares

If you’ve been following my blog, you know I have a favorite trick up my sleeve: the Free Stock Strategy. It’s not revolutionary, but it’s a simple, effective way to build a portfolio of stocks that cost me nothing in the long run. And by “nothing,” I mean free shares—those glorious, guilt-free assets that remain after I’ve sold enough to recover my initial investment.

Here’s the detailed playbook:

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Step 1: Choose a Stock

The first step is picking a stock with potential. This doesn’t mean chasing the next Tesla or Apple (though kudos to anyone who got in early). Instead, I look for companies with:

• Reasonable valuations (low P/E, PEG, or Price/Sales ratios).
• Solid fundamentals (steady revenue and earnings growth, manageable debt).
• Good prospects (a promising industry or macro trends working in their favor).

In this case, General Dynamics (GD) fits the bill. It’s a mature company with growth potential, reasonable debt, and a strong position in the defense industry.

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Step 2: Make a Modest Investment

I start with a manageable amount—usually $100 for smaller bets or $1,500 for more confident picks. This ensures that even if the stock doesn’t pan out, I’m not losing sleep (or my rent money). For GD, I’m going with $1,500 this month because it checks so many boxes.

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Step 3: Wait for the Stock to Rise (40% is the Magic Number)

Patience is key here. The goal is to wait until the stock’s price increases by at least 40%. Why 40%? Because it allows me to sell just enough shares to recover my original investment—including commissions—while leaving the rest as free stock.

For example:

• If I invest $1,500 and the stock rises 40%, my total position is now worth $2,100.
• I sell enough shares to pocket $1,500, covering my initial investment.
• The remaining $600 worth of shares are “free”—I own them outright without having spent a dime.

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Step 4: Sell Enough to Break Even

Once the stock hits that 40% gain, I calculate how many shares I need to sell to recover my initial investment. The rest stay in my portfolio, free and clear.

This part feels a bit like a magic trick—watching an investment transform into a no-cost asset while still benefiting from any future growth.

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Step 5: Hold the Free Shares Forever (or Until You’re Ready to Cash Out)

The final step is the best one: I get to keep the remaining shares forever. They continue to grow (hopefully), pay dividends (if applicable), and boost my portfolio’s overall value—all without having to invest another penny.

And if I ever decide to sell them? That’s pure profit.

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Why the Free Stock Strategy May Work with GD

1. Minimizes Risk:
   By recovering my initial investment, I eliminate downside risk. Even if the stock tanks later, I’ve already broken even.
2. Encourages Long-Term Thinking:
   Holding free shares makes it easier to ride out market volatility because I’m not emotionally attached to the money I’ve already recouped.
3. Builds a Diversified Portfolio:
   Over time, this strategy leaves me with a collection of “free” stocks across various industries, creating a well-rounded portfolio.

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Applying the Strategy to General Dynamics

Here’s how I plan to use the Free Stock Strategy with GD:

• Step 1: Invest $1,500 now while the stock looks undervalued.
• Step 2: Wait for a 40% increase in price. With GD’s strong fundamentals and growth potential, this feels achievable (though patience will be required).
• Step 3: Sell enough shares to recover my $1,500 investment.
• Step 4: Hold the remaining shares for free and collect dividends while watching GD’s value grow over time.

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Final Thoughts

The Free Stock Strategy isn’t about chasing massive wins or beating the market every year. It’s about building a low-risk portfolio, one calculated bet at a time. Whether it’s General Dynamics, a tech company, or a promising small-cap, the goal is always the same: turn a modest investment into free shares I can hold forever.

Have you tried a strategy like this? Let me know if you think GD is a good fit—or if you’ve got your own January pick that might be worth a look.

The Coin Thrown in the Fountain: My Immediate Trade

I don’t want to be too sorry if end up purchasing something else. So I just threw a $100 coin on this immediate trade: 0.38167 shares of General Dynamics at $261.9999 per share, for a total of $100. It’s a small start, but it keeps me engaged while I wait for the perfect moment to deploy the rest of the $1,500. Plus, who doesn’t like seeing a new ticker in their portfolio?