Valuations look extremely stretched, particularly in Nasdaq. Combined with coronavirus, the politica...
Look at Lockheed as a "Defensive" Idea
10/03/2019 5:00 am EST
“Playing defense” makes sense in this market. Now, I have a new way for you to do so: Buy a modest, starter position in my favorite defense sector stock, Lockheed Martin (LMT), suggests Mike Larson, growth and income expert and editor of Safe Money Report.
Lockheed is the largest defense contractor in the U.S., with a recent market capitalization of $108 billion and 2018 sales of $53.8 billion.
Some of its most well-known offensive and defensive weapons include the Aegis missile defense system ... the Desert Hawk pilotless drone ... the F-16 and F-35 attack aircraft ... and the HIMARS artillery rocket system.
Lockheed also provides advanced technology and training systems. That includes the “brains” behind the guns and rockets used by Black Hawk helicopter pilots and the C-130J Super Hercules maintenance and aircrew training platform.
Look, you probably don’t need me to tell you that 1) The world remains a very dangerous place 2) Tensions are heating up in the perennial Middle East “hot zone” and 3) President Trump favors increased defense spending, and has since he took office.
It’s also clear that tensions with China and Russia are steadily building. Members of the administration and Congress know that boosting the military capabilities of our nation and our friendly allies can serve as a significant deterrent to any future conflict.
And let’s be honest: Increased military spending also supports jobs and local economies in the districts of congressmen and women who control the Pentagon’s purse strings. You can see the impact on LMT’s top and bottom lines.
Second-quarter sales rose 8% year-over-year to $14.4 billion, with all four operating segments (aeronautics, rotary and mission systems, missiles and fire control, and space) showing respectable gains. Operating profit jumped almost 12%. Furthermore, the company raised its outlook for 2019 revenue, earnings, and cash flow.
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