Lockheed Martin is attractively valued to start the year, says Truist

Truist Sees Lockheed Martin Shares as Well-Priced Opportunity for Investors in 2024

Imagine you’re shopping for a sturdy backpack that’s a bit cheaper than the fancy ones, but still has all the pockets and tough fabric you need. That’s how some investors see Lockheed Martin right now—a proven company that might be “on sale” compared to others.

Why Investors Should Care About Lockheed Martin

Lockheed Martin is a giant in the world of making jets, helicopters, and defense systems. When governments spend more on defense, Lockheed often gets more business. This matters for investors because defense companies can be steady—even when the rest of the market is shaky.

Bulls: Why Some Experts Are Excited

  • Attractive Price: Lockheed Martin’s stock trades at 17 times its expected earnings, which is lower than the S&P 500 average of 22, and also below rivals like Northrop Grumman and RTX (FactSet).
  • Possible Growth: President Trump has proposed a $1.5 trillion military budget for 2027, which could mean more contracts for Lockheed Martin.
  • Strong Track Record: Lockheed has a history of delivering on big, complicated projects, which helps it stand out from newer competitors.
  • Global Demand: With international tensions rising, more countries are looking to buy and upgrade their military equipment—something Lockheed provides.

Bears: What Could Go Wrong?

  • Competition: New companies are trying to break into the defense business, which could make it harder for Lockheed to win every contract.
  • Government Scrutiny: In the past, the government has tried to cut spending on expensive or delayed weapons projects. If this comes back, it could hurt Lockheed.
  • Stock Has Lagged: Over the last year, Lockheed’s stock rose less than 11%, while the S&P 500 gained 17%—so it hasn’t been a top performer (S&P Global).
Related:  Citigroup Identifies AI Stocks Offering Attractive Value Opportunities for Investors

Looking at the Bigger Picture

Defense stocks like Lockheed Martin often move differently than tech or retail stocks. During uncertain times, they can be a safe place for investors. For example, during the 2008 financial crisis, the defense sector held up better than most others (NBER study).

But these stocks can also face challenges if governments cut spending or if new competitors create better, cheaper technology.

Investor Takeaway

  • Consider Value: Lockheed Martin’s stock looks cheaper than many of its peers, which could mean more upside if demand grows.
  • Watch Government Budgets: Big changes in military spending can have a big impact on Lockheed’s business.
  • Diversify: Defense stocks can help balance a portfolio, especially in uncertain times, but don’t put all your eggs in one basket.
  • Follow the News: Keep an eye on international events and government policies—they can shift the outlook for defense companies quickly.
  • Think Long-Term: Lockheed’s strengths are in its experience and contracts, which play out over years, not months.

For the full original report, see CNBC

Similar Posts