Leidos HoldingsNYSE: LDOS

Matt Maley looks at A.I. plays in the defense sector.

Leidos Holdings (LDOS), Cabot (CBT), Williams-Sonoma. (WSM), Booz Allen Hamilton (BAH) and Brady (BRC) could be compelling picks heading into the second half of the year.

LDOS which benefits from strong barriers to entry in heavily regulated industries has done very well this year generating close to 2.5x the return profile of the S&P 500. After a strong run, we feel the price action looks overextended and the stock could do with a pullback. Valuations don't look cheap either on an EV/EBITDA basis, whilst the Q1 record EBITDA margin performance may not be repeated in the medium term.

Stocks making new highs tend to make even higher highs, particularly when analysts' positive earnings estimate revisions are rolling in.

Leidos (LDOS) is well positioned to outperform the market, as it exhibits above-average growth in financials.

In the closing of the recent trading day, Leidos (LDOS) stood at $148.56, denoting a +1.36% change from the preceding trading day.

The Investment Committee share their top plays for the second half.

In the most recent trading session, Leidos (LDOS) closed at $143.87, indicating a +0.01% shift from the previous trading day.

Leidos (LDOS) makes a strong case for investment in the Aerospace sector, given its solid earnings growth prospects and rising backlog count.