Lockheed Martin is a good buy due to rising global defense spending

From Yahoo Finance: 2025-07-01 19:30:00

Global geopolitical tensions have eased after a ceasefire between Iran and Israel, impacting defense stocks. Global defense spending is set to rise, with NATO members committing to invest 5% of GDP in defense over the next decade. Lockheed Martin (LMT) is seen as a good buy due to rising global defense spending.

India may increase defense spending due to clashes with Pakistan, while U.S. allies in the Middle East are also ramping up defense expenditures. Lockheed Martin missed out on a U.S. Air Force program but is a strong contender for missile defense contracts. The company is adapting to modern warfare strategies.

Lockheed Martin’s book-to-bill ratio was below 1 in Q1, but it has a substantial order backlog. The company is expected to see mid-single-digit top-line growth in 2025 and 2026, with EPS forecasted to rise after a slight dip this year. LMT trades at a reasonable forward P/E of 16.8x.

Analysts have mixed opinions on Lockheed Martin, with a mean target price of $525.50. The company has a dividend yield of 2.85%, higher than competitors, making it attractive to investors interested in high dividend stocks. While valuations are not the lowest, they present a good opportunity to enter the defense sector.



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