In the martial arts, there are hundreds of strikes, holds, throws, takedowns, and other attacks designed to incapacitate an opponent. Yet for every offensive maneuver, there’s a defensive technique designed to nullify it, explains Jim Woods, editor of Successful Investing.

In 2022, the bears attacked investors largely with the sharp claws provided by Federal Reserve. And while monetary is likely to get more normal in 2023, we are still looking at the potential for rising inflation and a big slowdown in economic growth (if not outright recession).

So, when the market is under attack like this, where do we look for stocks that provide a defense? Well, the answer is, actually, in defense. By defense, I am referring here to big defense contractors — and one of my top 2023 selections — Lockheed Martin Corp. (LMT).

LMT is the world’s largest defense contractor, and as such it has dominated the Western market for high-end fighter aircraft since the F-35 program was awarded in 2001. Lockheed’s largest segment is aeronautics, with segments including rotary and mission systems, missiles and fire control and space systems.

In December 2022, the United States was in the process of finalizing plans to provide Ukraine with Patriot missile-defense systems in its war against Russia, and this could be a big revenue driver for LMT. That’s because while the Patriot system is built by Raytheon Technologies (RTX), the missiles it fires are made by Lockheed.

Think of the Patriot deal as what I call bullish “NewsQ,” i.e. news that can move a stock higher, and news that can help drive LMT shares higher in 2023. Yet what I like about LMT is not just the bullish NewsQ, but also its earnings growth and its 2022 share price performance.

On the earnings front, the company’s recent quarterly and annual earnings per share growth rates are in the top quintile of all companies, and I expect this metric to rise into next year. On the share price performance front, LMT’s year-to-date gain of 35.5% (through Dec. 16) was good enough to vault it into the top 6% of all companies in terms of relative price strength.

Finally, what this year has shown via the Russia/Ukraine war is that the world is still a very dangerous place, and one where conventional warfare in Europe could very well be a reality. As a result, governments must get ready, and that means they need LMT.

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