Lockheed Martin Corporation (NYSE:LMT) — This big-cap growth company is the largest military weapons manufacturer in the world. In addition to being the leading defense company, it also is a primary supplier of non-defense materials to NASA and other government agencies.
The current administration’s recognition of shortages of materials in military hardware should result in an increase in orders for LMT stock. Standard & Poor’s estimates at least a 5% increase in revenues in 2017. Growth is expected to be focused on aeronautics, and so deliveries of the F-35 and missile systems should increase as well.
Since Republicans are in control of both houses of Congress, a $58-billion increase in defense spending by the Donald Trump Administration is expected to be approved. An EPS of $12.38 in 2016 is projected to be followed by an EPS increase to $12.65 in 2017 and $14.55 in 2018.
S&P also projects a $2 billion share repurchase plan in 2017. Their 12-month price target for Lockheed Martin is $302.
The shares of LMT stock have been trading in a broad bull channel since March 2016. The channel has been about 18 points wide. However, with major support at about $253 (200-day moving average) and resistance at $275, the channel has recently widened to over 20 points.
Initial support rests at the 50-day moving average at $264. Lately volume has been flat and MACD is slightly oversold. Both indicate that before moving to a new high, a slight pullback could occur. Thus, try to buy LMT stock at $264 with a six-month trading objective of $310 for a proposed gain of over 14% — and remember, there is also a $1.82 quarterly dividend for a dividend yield of about 2.7%.
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