PORT CANAVERAL, Fla. – Amid one of the greatest bull markets in U.S. history, aerospace and defense stocks over the past year and a half have been battered on Wall Street.

But a noted market analyst told industry officials Thursday that the downtrodden now represent good value plays – if, that is, the federal government makes good on promises to shore up the U.S. defense budget.

In the past 12 to 18 months, the stocks of aerospace giants like Lockheed Martin and Raytheon -- not to mention smaller firms such as Loral Space & Communications, Globalstar LP and Orbital Sciences Corp. – all have dropped between 50 and 75 percent.

"And I think if you have any degree of confidence that the U.S. government will continue to follow through on its expressed plans to recapitalize the military, at least to some extent, then I would think that these are collectively probably about as cheap a bunch of technology assets that you can find."

A select few space-based businesses – particularly broadcasters such as British Sky Broadcasting, Echostar Communications Corp. and GM-Hughes, which operates DirecTV – "have created multiple tens of billions of dollars of equity market gains for their shareholders – almost to the point of embarrassment," Demisch said.

"It’s fortunate for our industry that these wonderful illustrations of the value of space were achieved during the past year, because frankly, the picture over the past few quarters has not been bright," he added.

"The sector has gained substantial market value in the aggregate – that’s the good news. The bad news is that most space-related equities have just been crushed over the course of the past 12 to 18 months."

A financial guru, who has followed aerospace, defense and technology companies for more than 20 years, Demisch attributed to downfall of many space-related equities to:

• Slumping U.S. defense budgets and a market-wide expectation for a continuing slide in military spending.
• The lack of U.S. government help during a difficult period of defense industry consolidation that saw Lockheed Martin, for example, become a behemoth made up of 17 heritage aerospace and defense firms.

"It’s pretty clear that all of the players who’ve got through major consolidations have had major digestion problems," Demisch said.

"Realistically, it’s extraordinarily difficult to merge two companies. Merging five or six, or 17, is orders of magnitude more difficult," he added.

"And we’re clearly finding that once you’ve got a problem, it can take several years to really get fully on top of that again. The only thing that solves that is really time, patience and, hopefully, a steady flow of contracts."

Demisch stopped short of making any specific buy recommendations on the aerospace and defense stocks that have tanked of late. Any of them might represent a good turnaround play.

"You can basically throw a dart at this point," he said.

That’s not to say, however, that investors shouldn’t tread carefully. With the mind-set on Wall Street today, further declines in beaten-up aerospace and defense stocks are indeed a possibility.

"There are some which are still sort of basically scraping along at the bottom, and where clearly investors are still not quite convinced that the last shoe has dropped," Demisch said. "And if you look around you in the world, it clearly isn’t the healthiest place to be."