Questor share tip: BAE's bids on record number of contracts will help it fly By cutting jobs in the UK - BAE has shed 22,000 in the last three years - is the company jeopardising its long-term capabilities and market-leading position? It had been hoped that BAE would win key export orders to make up for the UK and US challenges. Therefore the naming of Dassault as preferred bidder in the race to supply India with 126 fighter jets is a setback. The Eurofighter Typhoon, partly produced by BAE and assembled in the UK, had been the favourite for the $20bn (£12.7bn) contract. Despite this, Questor continues to back investment in BAE. The latest annual results simply reinforce this support. Fundamentally, the company looks cheap, trading at just 8.3 times estimated 2012 earnings. Defence companies have suffered on the market from a reduction in US defence spending and a lack of clarity as President Obama has been forced to battle against opposition to his budget. However, Mr King said on Thursday that US budget proposals were at the "top end of expectations." He added: "We are starting 2012 in a much better position than last year." The company made 47pc of its revenues in the US in 2011. Moving beyond 2012, BAE is positioning itself for future growth in markets such as electronics and cyber. Detica, BAE's cyber division, does 50pc of its business in the commercial sector. Mr King said it could double in size during the next three to four years. Also, BAE has maintained rewards for shareholders while the market has been challenging. In total, £2.2bn has been returned to shareholders in the last two years. This includes a £500m share buy-back last year. Part of the reason shares in BAE slipped on Thursday was disappointment that the company had not expanded its share buy-back programme. Nonetheless, the final dividend was increased again by 7.4pc to 18.8p. This means BAE is now yielding an attractive 6.1pc. So, the defence market is clearly challenging and BAE has suffered setbacks. However, the company remains a global leader in the market and has exposure to potential growth sectors and geographical markets, such as Saudi Arabia, Australia, and Brazil. Mr King says the company is bidding on an "unprecedented" number of overseas contracts. Despite revenues falling, pre-tax profits increased from £1.41bn to £1.47bn in 2011. First tipped in January 2010 at 359½p, BAE shares remain below that level. However, they have risen 14pc so far in 2012, and remain a Buy.