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The Lockheed Martin Corporation (NYSE:LMT) ended 2022 with a bang, reaching an all-time high of $498. And investors might be backing them to do more of this within the months ahead. Let’s see what among the drivers from recent weeks is perhaps for this.
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For those who don’t know, Lockheed is a defense and aerospace company that counts governments in its major customer base. The corporate’s stock has done well lately, up 90% since 2019, making it a lovely investment for those searching for something reliable.
With tech continuing to underperform, defense stocks have turn out to be a haven, giving contractors like Lockheed Martin the upper hand going into 2023.
Bullish Tailwinds
The excellent news first. Locked recently bagged several major Navy contracts, including F-35 fighter aircraft, which have gone an extended approach to boosting their end-of-year numbers and giving them a hot begin to 2023.
These are long-term contracts expected to last until the tip of the last decade and can help ensure Lockheed’s place on the forefront of the worldwide military aircraft market, which is predicted to have a 4% CAGR in the identical timeframe.
With numbers like these, investors moving into defense stocks like Lockheed and peers reminiscent of Northrop Grumman (NYSE:NOC) have decent tailwinds backing up any position. For what it’s value, of those two more well-known names within the space, Lockheed is showing the strongest begin to the yr, with their shares down just 4% in comparison with Northrop’s -8% drop.
Perhaps with a watch to avoiding the identical tarbrush that has dented the attractiveness of oil and gas stocks to funds lately. Management has set several ambitious sustainability goals, including reducing its greenhouse gas emissions by 50% by 2030 and using 100% renewable energy at its facilities by 2030.
Eye-catching obviously, but achievable? We’ll must wait and see. Within the meantime, investors might be watching closely for the corporate’s latest earnings report, which is due out by the tip of the month. As reported on Marketbeat last week, analysts from Jefferies at the moment are expecting the corporate to post higher-than-expected EPS numbers, which could possibly be the driving force needed to spark a fresh rally.
Shares are trading along a line of support right away on the $460 mark, and we sort of have to hold this in the approaching sessions to stave off any concerns that they’ll break down further. Having consolidated just below $490 for much of the past 4 months, that is the primary proper test the bulls have needed to contend with for the reason that summer.
The Greater Picture
With that in mind, it’s essential to acknowledge that headwinds exist. This remains to be a defense stock that relies heavily on government projects worldwide to feed its revenue and growth. With a shaky economy entering 2023, there’s a probability that defense budgets might be within the firing line.
To that end, White House representative Kevin McCarthy rattled the defense industry with a recent speech that exposed plans to slash defense spending by about $75 billion. It stays to be seen if this can even get near approval, but it surely’s still indicative of the first risk to a business like Lockheed.
Investors should now watch the tape to see if the $460 holds. If shares can consolidate along here, then they’ll be well set to trend up into the approaching earnings report, where an upside surprise, as anticipated, could possibly be just the spark they should set a fresh all-time high. To the downside, any continued weakness will likely see them trend below $400.
Do you have to invest $1,000 in Lockheed Martin right away?
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Article by Sam Quirke, MarketBeat