Lockheed Martin (NYSE: LMT) presents a compelling investment opportunity amidst ongoing geopolitical unrest. As the aerospace and defense giant behind renowned systems like the F-35 fighter jet, C-130 Hercules transport aircraft, and HIMARS, Lockheed Martin can leverage current instability to fuel growth.
With rising defense budgets and a steady stream of contract wins, the most recent contract with the U.S. Navy worth $1.56 billion, the outlook for LMT stock remains bullish.
Current geopolitical instability bodes well for LMT stock
Since early 2022, global geopolitical tensions have escalated rapidly. Significant conflicts, such as the ongoing war in Ukraine and the Israel-Hamas conflict, contribute to broader global instability.
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Additionally, the possibility of a Chinese invasion of Taiwan looms large. While these situations are distressing, they also drive increased defense spending.
As one of the largest suppliers of military systems to the U.S. and its allies, Lockheed Martin benefits significantly. The company posted record revenues of $67.6 billion last year, with further gains expected this year.
Strong financial performance and growth outlook
Following a strong FY2023, Lockheed Martin is poised for another record sales year in FY2024. The approved defense budget for this year includes significant funding for munitions, multi-year procurement, hypersonics, classified projects, and key programs like the Black Hawk, fleet ballistic missile, and F-35.
Additional allocations were made for F-35 aircraft, C-130, and combat rescue helicopters. The House’s recent approval of $95 billion in supplemental defense spending for Ukraine, Israel, and Indo-Pacific security further supports Lockheed Martin’s growth.
Lockheed Martin’s Q1 results showcased significant momentum, with net sales reaching a record $17.2 billion, reflecting a 13.7% year-over-year increase. Growth was widespread across all divisions: Aeronautics (9%), Missiles and Fire Control (25%), Rotary and Mission Systems (16%), and Space (10%).
The company closed the quarter with a backlog of $159.4 billion, ensuring stable cash flows and growth for the remainder of the year and into FY2025. Wall Street expects record sales of approximately $69.7 billion in FY2024 and $72.3 billion in FY2025.
Investors always pay the most attention to strong financials and a promising growth outlook, and LMT stock ticks both of these boxes.
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