Kyle Bloom, one of our Industrials sector analysts, pitched Lockheed Martin Corporation (NYSE: LMT) on February 5th. Lockheed Martin is the world’s leading defense contractor, based on revenue for 2017. Kyle’s investment thesis emphasized the potential for the American defense sector as a whole and Lockheed Martin specifically. The American defense sector is mostly supported by the spending of the United States government and the Department of Defense, which saw spending cuts during the second term of the Obama administration. During this phase, Lockheed Martin and the rest of the industry sought sales overseas. Now, with the Trump administration vouching to drastically increase defense spending, Lockheed Martin will see revamped sales through the Department of Defense while their foreign costumers will respond accordingly due to the tense geopolitical environment. Lockheed Martin had a $100B backlog at 2017 year end, which is more than twice the amount of their nearest competitor’s backlog. Additionally, Lockheed Martin has the most diverse defense products and services across their four business segments, an industry leading dividend yield and share buyback plan, and is trading at a significant discount against their competitors according to their price to free-cash-flow ratios.
Kyle proposed to purchase 30 shares of Lockheed Martin while using 110 shares of the industrials ETF, XLI, and 10 shares of Raytheon to fund the transaction. The proposal passed unanimously