With rising energy prices threatening commercial aviation, aerospace and defense stocks haven’t fared well in the global equities downturn. Year-to-date, according to an index tallied by FactSet Research Systems, the stocks of aerospace and defense companies worldwide have dropped 19% in dollar terms, versus an aggregate decline of 14% across all sectors globally.

At least one aerospace and defense stock, however, has bucked the year-to-date trend: Saab, the Swedish maker of military aircraft, aviation components and command and control systems. The share price for the Stockholm-headquartered company, not to be confused with the auto brand now owned by General Motors (nyse: GM – news – people ), is up 17% so far in 2008.

Even with the uptick, Saab still looks cheap. Its Stockholm-listed shares sell for just 10 times the average analyst estimate for 2009 earnings per share. Contrast that with equivalent multiples of 12 for Lockheed Martin (nyse: LMT – news – people ) and 13 for Raytheon (nyse: RTN – news – people ). Those interested in international investing should put Saab on their radar screen.

“In this turbulent time, we believe investors will appreciate this type of company more and more,” says Mikael Laséen, a Stockholm-based analyst at Kaupthing Bank, speaking of Saab. “It is of course a political risk, but clearly you don’t have to worry about the business cycle and consumer spending that much.”

Full story at Forbes.com

Raymond Mills can’t talk about the job he held before signing on to T. Rowe Price. Literally. With a doctorate in aerospace engineering from Stanford University, he worked on some sort of national security-related program until a decade ago. “It was classified,” is all he’ll say.

Less spooky is the way the manager of T. Rowe Price’s $1.5 billion (assets) Overseas Stock Fund picks stocks. Some of Mills’ selections are household names. Others are practically unpronounceable. All, in his view, offer above-average earnings growth–thanks to superior products, market dominance or exposure to fast-growing economies–at reasonable prices. For investors, that adds up to a way to ride out and profit from the market’s current volatility.

Toyota Motor (nyse: TM – news – people ), a Mills favorite, is a good example. “Honda and Toyota are leaders in hybrid technology and fuel efficiency,” he says. “They’re going to be winners over time.”

Long-term promise aside, Toyota shares are down 20% from a 52-week high amid the malaise in the global auto business. That has left the stock selling at nine times latest-12-month earnings, versus a five-year average of 13.

“Maybe we don’t think it’s going to be a great stock for the next year,” he says of many of the shares he tucks away, “but we think it’s going to be a great story over the next two to three or five years.”

Full story at Forbes.com