Why Has The Lockheed Martin Stock Spiked In The Last Week?

Lockheed Martin (NYSE: LMT) has been in the news for all the right reasons since November 9th. The company’s stock price has jumped by almost 10% since the election results were announced last week. In the rest of the article, we will examine the possible reasons for this significant rally.

• One of the most evident reasons for the bullish movement is Donald Trump’s victory in the US Presidential election. Throughout his campaign, Trump has been very vocal about the need to increase defense spending to best prepare against threats to America. This has a direct impact on the revenues for defense contractors like Lockheed Martin and its competitors.
• Trump has vowed to increase defense spending by a large margin. How large a margin is this? It could be anywhere as large as $100 billion according to analysts, as the President-elect not only wants to make the armed forces more efficient, but increase the overall strength as well.
• The future President must boost industry and manufacturing under him to have any chance at a second term. For this, the defense sector is a strong candidate to contribute big numbers, and the LMT stock is poised to be one its main beneficiaries.
• Sikorsky is bound to benefit from an overall increase in defense spending. The army has been plagued by an aging naval and helicopter fleet. The overall deficiencies in the defense budget in recent years has directly impacted the army’s ability to replace or repair the equipment. With an increased cash injection in the defense sector, we could see the top lines of Sikorsky increasing over the next few years as new orders begin to roll in.
• Furthermore, the F-35 program is expected to see a massive boost in cash. At present the Pentagon has expressed its need for 1,763 air combat fighters. This number could easily hit the 2,000 mark given Trump’s statements on increasing the overall size of the airforce.

Although the situation seems bright for LMT in the coming few years, one must be wary of what to expect. Everything Trump has said must be taken with a grain of salt. There are many things that the future President has promised, but can he deliver on all fronts? Only time will tell.

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