One of the big movers higher this year has been Lockheed Martin (NYSE:LMT). Shares of this defense contractor have surged nearly 30% higher year-to-date and remain on the move. Today, LMT stock has surged another 2.2% higher at the time of writing to fresh 52-week highs.
The reasons for this move aren’t that difficult to guess. The Russian invasion of Ukraine has put the U.S. and the Western world on guard. And while the U.S. has thus far avoided direct conflict, investing in domestic defense names certainly seems like a smart portfolio move. At least as a hedge.
Investors are rightly paying close attention to how this conflict will affect global markets. Right now, commodities are in focus, as are supply-chain-sensitive stocks. However, defense contractors such as Lockheed Martin are among the few companies investors believe could sustain higher valuations during this period of uncertainty. With little detail on how long this war will rage on, investors appear to be settling into LMT stock and its peers right now.
That said, there’s another catalyst that’s driving Lockheed Martin higher today. Let’s dive into what investors are watching with this company.
LMT Stock Surges on Training Equipment Contract Modification
Today, it was announced that Lockheed Martin received a juicy contract modification for its partnership with the Department of Defense. This $166.6 million upgrade will provide F-35 aircraft training devices to the Navy. These devices include full-mission simulators, interactive courseware and a multispectral database.
Indeed, Lockheed’s F-35 fighter jet is among the most advanced in the world. Ensuring that military personnel are well-equipped to handle these aircraft seems like a good investment amid geopolitical uncertainty.
This deal also includes various non-recurring engineering services to customers to replace a rechargeable battery module. Most of this work will happen in Florida, though it will also occur in other states, including Texas.
This deal is being interpreted positively by the market, and not only for the dollar amount involved. Additionally, this contract represents a tilt toward investment in the defense sector, something investors in LMT stock like to see.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.