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Why Hypersonics Are the Next Big Catalyst for Lockheed Martin Stock

Ask anyone about Lockheed Martin (NYSE:LMT) and more often than not, you’ll spark a discussion about the F-35. An ambitious project that corrals stealth technology, multirole combat capacities and in some models, a short take-off and vertical-landing capabilities. The F-35 theoretically represented the flagship contract underlining the LMT stock price.

LMT Stock: Hypersonics Are the Next Big Catalyst for Lockheed Martin
Source: Ken Wolter / Shutterstock.com

In reality, it has turned into an administrative nightmare. According to one assessment from CNBC, the F-35 became one of the most challenged programs of the Defense Department’s history. “The laundry list of setbacks includes faulty ejection seats, software delays and significant helmet-display issues. The program had an initial acquisition cost of $406.5 billion.”

However, the Defense Department was already vested in the F-35 program when these problems sprouted in earnest. Cynically, then, Lockheed Martin stock was likely to benefit one way or another.

Of course, dealing with a PR crisis is never ideal. Thus, the Pentagon announcing late last month a $34 billion contract with Lockheed Martin for the delivery of 478 F-35 fighter jets came at an ideal moment. Previously, it appeared that the LMT stock price was peaking and running low on fresh catalysts.

Moreover, with Lockheed working out some of the kinks in the F-35 system, most recently the helmet-display defect, investors can focus on the positives. For instance, the F-35 comes in three variants, missions purposed for the Air Force, Marine Corps and Navy. Further, the F-35 has willing buyers among several U.S. allies. Over time, this should bolster the longer-term narrative for Lockheed Martin stock.

But as impressive as the F-35 is, prospective buyers have another reason to consider LMT stock: the need for supremacy in hypersonic missiles.

Hypersonics Make LMT Stock a “Necessary Evil”

Despite the sharp geopolitical rhetoric that we see involving U.S.-Russia relations, the two sides have never gone directly at war. The closest thing we’ve gotten are proxy wars against each other; notably, the Vietnam War and the Soviet War in Afghanistan.

But what has kept the two Cold War superpowers in check was a concept called mutually assured destruction, or MAD. Basically, both the U.S. and the Soviet Union could eliminate each other several times over with their respective nuclear arsenal. And that’s part of the reason why we’re all alive today.

Interestingly, FP contributor Robert Jervis mentioned that MAD may not be an effective deterrent against extremist terrorist attacks. In Jervis’ words, “Warding off 99 terrorist attacks does little good if the 100th succeeds, especially if weapons of mass destruction (WMD) are used.”

But what is an effective deterrent – and one that can boost Lockheed Martin stock – is hypersonic weapons systems. Lockheed is currently developing them and their implications are profound for U.S. national security. With such tech, we can blast a target in Micronesia from Washington, D.C., in 30 minutes.

Such capabilities are frightening, perhaps macabre. But they’re also incredibly necessary. In fact, we need Lockheed Martin to quickly establish dominance in this arena. If we don’t, we risk falling behind to China and Russia.

And because we are morally superior to both these countries, we actually have an obligation to the global community to develop these weapons. Unfortunately, this is the reality of geopolitics in the modern era. To dissuade belligerent but otherwise rational actors, you must have the credible capacity to render astounding and cruel violence.

Admittedly, this sounds terrible. But it’s the only way to preserve stability. As a “bonus,” it’s a massive, perpetual catalyst for LMT stock.

Practical Purposes for Hypersonic Weapons

Centrally, the idea of hypersonic weapons development focuses on deterrence in the modern era. Invariably, no matter what we do, the Russians and Chinese will always try to usurp our global supremacy. Thus, as long as we maintain robust progression in our hypersonic capabilities, these two nations will stay in their lanes.

However, warfare has also become asymmetric. While nuclear warfare is thankfully theoretical, conventional warfare to eradicate irrational terrorist cells has become a pronounced reality. However, with hypersonic weapons, we can deliver precision strikes rapidly, sparing the need to risk service members’ lives.

Furthermore, the U.S. military may soon have the ability to call for decapitation strikes. This is a fancy term for assassinating high-value targets. And with the speed of hypersonics, the targeted enemy assets may not have time to respond.

Again, I recognize the somber nature of what I’m saying. However, this will be a constant reality until humans are no longer on this earth. Until then, invest in Lockheed Martin stock.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2019/11/why-hypersonics-are-the-next-big-catalyst-for-lockheed-martin-stock/.

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