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28 minutes ago
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Could Buying Lockheed Martin Stock Today Set You Up for Life?
Key Points The medium-term outlook for defense spending is positive, with both the U.S. and other NATO countries looking to ramp up investment. Lockheed Martin is well positioned to benefit from President Trump's defense budget. The company's execution issues have troubled it in recent years, and many defense companies have faced margin pressures. 10 stocks we like better than Lockheed Martin › There's a lot to like about defense giant Lockheed Martin's (NYSE: LMT) stock, but is it enough to make it an investment that investors can feel comfortable with, knowing it will generate life-changing long-term returns? The bulls' case for Lockheed Martin The investment case for the stock is relatively easy to understand. It's based on the enduring need for defense equipment and services, as well as its increasing importance in an age of geopolitical conflict. Not only is President Donald Trump seeking to ramp up the defense budget to a record $1.01 trillion, but NATO has also been enlarged, and its members have recently agreed to invest 5% of their gross domestic product (GDP) on core defense requirements as well as defense and security-related spending by 2035. Moreover, much of the spending, at least in the U.S., focuses on missile defense and tactical missiles, which Lockheed Martin specializes in. Indeed, discussing the matter on an earnings call in April, CEO Jim Taiclet said, "Our 21st century security strategy, where we integrate existing and new satellites, aircraft, ships, missile launchers, and command and control systems with constantly upgradable digital technologies, was tailor-made for [missile defense system] Golden Dome." Furthermore, Lockheed Martin's current backlog of $173 billion represents 2.3 years' worth of sales based on the midpoint of management's guidance for full-year 2025 revenue. It's also worth noting that its core customer, the U.S. government, is a highly reliable payer. Turning to valuation, the midpoint of management's guidance range calls for $23.15 in earnings per share and $6.7 billion in free cash flow (FCF). Based on the current price, it would put the stock at 17.2 times earnings and 16.3 times FCF. They are attractive valuations for a company with such solid growth prospects. So is it that case closed? As usual, investing is rarely that simple. The bears' case for Lockheed Martin The negative case for the stock can be seen in three interrelated arguments: Lockheed Martin's execution challenges in recent years, notably with its most important single program, the F-35 Lightning II Joint Strike Fighter, have damaged confidence in its ability to produce "long-run franchise" programs. Lockheed Martin, like many other defense contractors, including Boeing and RTX, has struggled to achieve margin expansion in recent years, as the U.S. government has become more adept at negotiating contracts, particularly through the use of fixed-price contracts. The current environment is highly conducive to defense spending, but that doesn't guarantee that it will be the case in the future. Lockheed Martin's execution and margin challenges The company's execution challenges are encapsulated in two events this year. First, a Department of Defense description of the proposed 2026 defense budget included reducing F-35 procurement. There's little doubt why procurement has been reduced. The DOD is focusing on making existing F-35s mission-capable (able to perform a core mission) rather than procuring new planes. According to just 51.5% of F-35s were mission-capable in 2024. High-profile delays and issues on the Technology Refresh 3 (TR3) on the F-35 have reduced that percentage. In addition, the cost overrun on the F-35 has been so significant that the military is now considering flying it less to reduce costs. These issues damage confidence in Lockheed Martin, not least as it faces upfront costs on programs in expectation of turning them into "long-run franchises." As such, there are questions about its ability to grow margins in the future. The second issue is the loss of the next-generation air dominance (NGAD) contract to Boeing, a decision highly likely to have been influenced by the issues with the F-35. Long-term defense spending This isn't the place to enter a detailed debate over the sustainability of government spending. Still, it's worth noting that if you are buying defense stocks based on the security of long-term growth in spending from the U.S. government (which currently accounts for two-thirds of NATO spending), then you will be comfortable with the following chart of U.S. public debt to GDP and the idea that the possibility of rising debt levels won't constrain spending on defense and other matters in the future. In addition, it's extremely difficult to predict where global defense priorities will be over the next few years, let alone a lifetime. Is Lockheed Martin stock a buy? On balance, defense stocks appear slightly undervalued; however, Lockheed Martin's issues with the F-35 may not make it the best way to capitalize on a positive medium-term outlook for defense spending. As such, Lockheed Martin isn't likely to be a stock that investors can make a life-changing investment in. Should you buy stock in Lockheed Martin right now? Before you buy stock in Lockheed Martin, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Lockheed Martin wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin and RTX. The Motley Fool has a disclosure policy. Could Buying Lockheed Martin Stock Today Set You Up for Life? was originally published by The Motley Fool
Yahoo
an hour ago
- Yahoo
Here's a high-potential stock to consider buying in July!
Carr's Group (LSE:CARR) could be a high-potential stock that's going under the radar. The company's entering a new era as a focused agricultural specialist and its streamlined profile, financial strength, and potential catalysts make it an intriguing proposition for value-oriented investors. What drives Carr's? After divesting its engineering division for £75m, Carr's is now a pure-play manufacturer of livestock nutrition products, mostly feedblocks, with roughly half its revenues coming from the UK and the other half from the US. This transformation has made Carr's much more dependent on the agricultural market cycle, leading to greater seasonality in its results as seen in H1 FY25. With production sites in Silloth, Ayr, and Bury St Edmunds, Carr's exports its specialist nutrition products globally, but the UK and US remain its key revenue drivers. Momentum after transition Recent interim results demonstrate the underlying momentum in the business. In H1 (six months to February) group revenue rose 7% to £50.6m, driven mainly by a strong 15% year-on-year increase in UK agriculture sales. Adjusted operating profit expanded even more, up 64% to £5.9m, as margins recovered from challenges seen during and after Covid. Yet, investors considering Carr's must look beyond the robust first half. Management's flagged that the second half of the year will likely be softer, particularly in the US, where herd sizes and demand for feedblocks remain below historic norms. Seasonality is pronounced, and with the company's new agricultural focus, volatility's inevitable. Management's cautious guidance suggests that the full-year will not simply double the strong interim figures. Running the maths I'm not going to try and guess where adjusted earnings will end up this year. However, statutory forecasts published online suggest the company's trading at 44 times forward earnings. Remember this is a statutory basis and the discrepancy with adjusted figures. However, this falls to 13 times for 2026 and nine times for 2027 as earnings improve. This would put Carr's on an earnings multiple that appears modest when set against its balance sheet strength and returning capital. Moreover, the pending tender offer could return up to £70m to shareholders, a dramatic gesture for a company of its market size. The dividend story's also promising, with the yield projected to climb from its current modest level toward 4% by 2027. Are tariffs a catalyst? One of the most significant catalysts for Carr's in the medium term is the impact of US trade policy. On one hand, higher tariffs and a weakening dollar don't bode well for Carr's' exports to the US. However, the market may prove to be fairly price inelastic. However, US tariff increases on imported beef are designed to protect and stimulate domestic livestock businesses. Over time, this could benefit Carr's materially as a larger US herd would, in theory, lead to greater demand for feedblocks and the like. For me, this is definitely a stock to watch. It's becoming a more agile business and I'm excited to see how it performs once that transition dust settles. It certainly deserves attention. The post Here's a high-potential stock to consider buying in July! appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool James Fox has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025
Yahoo
an hour ago
- Yahoo
A new dimension of luxury: Are TikTok and Gen Z responsible for the boom in the European market?
Despite the global slowdown in the luxury goods sector, Europe is showing growth. In 2024, the value of the market in the region increased by 3% and reached almost €110 billion. What is behind this paradox? View on euronews Related Videos Fed's Waller on Labor Market, Rate Cuts, Inflation, Fed Chair Netflix stock slips despite Q2 beat: How valuation factors in Humana, Chipotle, Roku: Trending Tickers IBKR jumps, Amex earnings, Union Pacific reportedly in deal talks Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
