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Opinions Bruce Tatters
Lockheed MartinLMTCOMMENTDec 12, 2014
Stock price when the opinion was issued
As of Jun 15, 2026. Market Open.
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Defense area got really crowded, now pulled back. Biggest of all the defense companies. Great time to add, lots more to go. Chart shows a nice entry point.
Disclosure: Doesn't own directly, but does via ITA and XAD (his preference).
Greg NewmanProbably two different animals in terms of exposures. Which one you prefer depends on what you're looking for.
BA is coming off a very difficult time in terms of culture -- relationship with FAA, turnaround, planes grounded. Tough road, but hopefully coming off the bottom. Growing ~14%. Recently announced increase in production levels. This may improve FCF.
LMT growing at a slower rate of 5%. Much more exposure to defense. Robust spending on defense around the world.
For defense, you'd want to go to the US. LMT is a leader in the space, if you had to choose a name.
Sector continues to perform technically -- higher highs and higher lows. 200-day MA is moving higher, long-term weekly averages are strong too. Only concern is that it's really jumped above the bandwidth of gradual growth. Plus, how much will elections affect US defense spending? Politics can change, and then so can the spending.
2025 was an annus horibilis for them: they lost the F-47 contract to Boeing, they paid a punitive charge, and Musk punked them in a tweet. However, they are making the F-35 as fast as they
Jim LebenthalNot just about aerospace and defense, but also about robotics (pilotless fighter jets and bombers, which should mitigate a lot of pilot error). Investors should have 5-10% of a portfolio devoted to robotics, and if you get aerospace and defense on top of that, even better.
He also really likes ROK.
LMT has definitely done better over the last couple of years. BA is a bit of a recovery play here. In general, where we are in the cycle, he thinks we're in phase 2 but on the cusp of phase 3. Phase 2 is typically where materials, industrials, and technology continue to do well.
These names should do OK, but we are approaching the end of the cycle. Ultimately, at some point, we'll see rotation out of these industrial plays.
There used to be 51 defence contractors, but after merging there are now only five major companies. Rather than innovative, these companies are gaming government contracts. Trump appointed Elon Musk to the new Efficency Dept. and Musk openly criticized Lockheed Martin's F-35's design and should be replaced by drones. However the LMT CEO responded that enemies use fancy fighter jets of their own, and Israel recently effectively used F-35s against Iran. Musk's criticism have put the defence industry under a microscope, an industry that has always been sacrosanct. Nobody wants to be accused of being weak on defence. LMT is -14.77% since Trump was elected. Barclays just stated that defence remains difficult with more budget risk than thought, given Musk. For pure defense stocks, wait and see. This sector is untouchable.
The US defence industry, for many years leading up to the last 12-15 months, was a very desolate and terrible place to be. First of all because of US government cutbacks. With the beginning of ISIS and the new conflicts starting globally in the last 6 months, the need for defence has really ticked up. This company has a couple of special product lines in fighter jets, which are sort of world standard, so they have a guaranteed growth profile. However, generally speaking defence stocks are not expensive and are either at or below the S&P 500 multiple. This company has some very unique R&D projects going. He likes this at this time.