War Is Coming And This Defense Stock Is Set To Soar (Morgan Stanley Boosts Price Target By $96)

We all know the saying, there are only two things that are certain in life: Death and Taxes. Sure, this saying is about as old as time, and while it’s been the backbone of plenty of terrible decision making conversations in my life - I’d like to throw in a third element to this saying this morning: Death, Taxes, and Politicians Love for War Money. 

(Source: Imgflip) 

Now bare with me here, because this is definitely not a political article whatsoever, however, if you’ve ever seen the movie Vice, you’ll understand what I’m getting at here. In short, love him or hate him Dick Cheney is the OG of political manipulation. And while most don’t like to admit it, he pulled the strings in the Bush Administration - which is why many over the years have cited him as the most powerful VP in United States history.

(Source: NPR) 

But when it comes to the war in the Middle East, the Weapons of Mass Destruction smoke and mirrors, and the quick pinning of 9/11 on Saddam Hussein - I truly believe that the impact it had on Oil was the ultimate benefit for those pulling the strings. Especially considering Cheney was President and CEO of the oil giant, Haliburton prior to becoming Bush’s right hand man. 

(Source: American Movement) 

So obviously, when peeling back the curtains, revenge likely wasn’t the only motivation here. And when it comes to us investors, specifically during uncertain times like these, where global tensions in Israel, and Ukraine are growing tighter by the day - it’s important to see where the money is flowing. 

And right now, that money is flowing towards one of America’s most prominent aerospace and national defense companies: Lockheed Martin (ha! You thought I was going to say Palantir huh?).

(Source: Lockheed Martin) 

Again, with global tensions running hotter than a jalapeno under the sun, Lockheed Martin’s stock has surged +22.80% YTD and up +17.67% this month. Compare that to last year's performance as the stock dipped -6.83% on the year, the demand is clearly soaring for Lockheed. 

(Source: Market Beat) 

For instance, during Lockheed’s recent Q2 earnings, they didn’t just beat expectations; they obliterated them. For EPS, analysts predicted $6.25, but Lockheed nailed the estimates by +10.28% as they reported an EPS of $7.11. 

Revenue also came in hot and heavy as analysts thought a cool $17.01 billion was ambitious. However, with a beat of +6.25%, Lockheed had Wall Street raving as it reported a cool $18.12 billion in Q2 revenue (with revenue also catapulting +8.56% YoY). 

(Source: Barrons) 

So clearly, with everything going on in our world, the numbers are talking for Lockheed, as their digital transformation is becoming a game-changer. Especially since they’ve officially resumed F-35 jet deliveries after a hiatus, which is expected to further boost their Aeronautics segment. In result, this had Lockheed raising its full-year guidance, as they’re now anticipating 2024 EPS between $26.10 and $26.60, with sales projected to hit $70.5 billion to $71.5 billion. (Also better than what analysts predicted).

(Source: Defense One) 

To add to the financial momentum, Lockheed is also putting up $450 million to acquire Terran Orbital in order to boost its tracking layer programs and Space Development for their clients (aka the government, aka leveraged in war baby). Now keep in mind, this isn’t just a random purchase for Lockheed. It’s a strategic move that not only gains cutting-edge satellite tech (that’s been used on 80 successful missions already) but also solidifies its position as a leader in aerospace innovation.

(Source: TechCrunch) 

So as we can all see, Lockheed has definitely positioned itself perfectly as more money flows into the Department of Defense - and right now Wall Street is loving it. For example, just recently, analysts at Morgan Stanley and RBC upgraded their price targets on Lockheed to $599 and $600 (indicating a +8.59% and +9.34% potential upside). 

(Source: The Fly) 

Which again, makes sense considering that the technicals are also screaming of massive opportunity on this stock -  as 16 out of 17 of our Stocks.News indicators are flashing “Strong Buy”, while 15 out of 15 moving averages are following suit - hinting at more uptrending continuation going forward. 

So with all of that said, the broader picture is this: Lockheed is not only experiencing a surging demand based on it’s previous earnings, but the stock is truly reflecting the growth. And given that global tensions are continuing to heighten, combined with politicians' love of war money (again, not all but definitely some who have skin in the game somewhere), the future looks promising for the stock going forward.

(Source: New York Post) 

Now obviously, in no way am I saying go out and YOLO on Lockheed, Palantir, or any other defense contractor for that matter. Obviously do your due diligence and don’t be ignorant. Because again, even with a soaring stock price, a new arsenal of Terran Orbital under it’s belt, and an ever flowing flow of money into national defense stocks - at the end of the day, only three things are certain in life: Death, Taxes, and Politicians LOVE of Money. 

So in the end, keep that in mind as we creep towards tomorrow's opening bell, and in the meantime I hope you have a wonderful and blessed Sunday my friends. Stay safe and stay frosty! Until next time… 

Stocks.News does not hold positions in any companies mentioned in the article.