Lockheed Martin Corporation (NYSE:LMT) stock took a hit recently when President-elect Donald Trump dropped a Twitter bomb on the company, complaining about how expensive the F-35 fighter has become.
This was on the heels of Trump tweeting that the cost of a new Air Force One by Boeing Co (NYSE:BA) was too expensive and unnecessary.
LMT stock dropped 4% the day of the tweet. BA also got hit pretty hard.
But the point isn’t that companies should fear Trump. Investors should fear a market governed by traders that move stocks based on a 140-character comment. Trump does not control the defense budget — the House of Representatives holds the purse strings. The president may have a say, but he hardly is going to go through every line item and re-negotiate funding. That’s a full-time job in and of itself.
But let’s forget about the inside the Beltway for now. This odd behavior from the markets is part of the mania that has gripped stocks since Trump was elected in November.
And it presents us with a unique opportunity. Before the election, defense stocks were moving higher because they looked like winners regardless of a Trump or Clinton victory. And that is the narrative worth holding onto.
LMT Stock Still Strong
LMT is up 16% year to date and throws off a nearly 3% dividend yield. LMT also has far more going on than its long-term fighter build. It enters 2017 on a strong Q3 earnings report, blowing out analysts’ expectations by almost 14%. It will report earnings again on Jan. 24, and they should be just as strong, if not stronger.
That’s why this is a great opportunity to get into LMT now, before Q4 earnings launch the stock once again. Right now, Lockheed Martin is reasonable valued but I don’t expect that to last much longer. In coming quarters LMT stock will be trading at a premium. Right now it’s a bargain.
There’s another piece to Lockheed Martin that makes it very compelling here — its recently acquired Sikorsky helicopter division.
If a massive new fighter jet program like the F-35 is a home run for a defense contractor, helicopters are the consistent base hits. There are far more of these deployed around the world than fixed-wing aircraft. They are the workhorses in all theaters of operation. They move people and things in and out of forward bases, remote settings and, most importantly, trouble.
Of the approximately 37 military/homeland security/rescue helicopters in production, 16 are built by Sikorsky. Before its acquisition, Lockheed had six helicopters in that 37. Now, Lockheed has 22 of the 37 major production helicopters in the world.
Then, you add on LMT’s unmanned vehicles and this number becomes even more impressive, because unmanned helicopters are in big demand right now and that demand will continue to grow. As the leader in both the unmanned and manned helicopter technology, Lockheed Martin will continue to rack up solid gains in the years to come.
And as you can see by the news this week, the world is a dangerous place. That keeps LMT in high demand.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
