Lockheed Martin is the IBD Stock of the Day. LMT stock is in a base, and is trying to bounce off key support levels. The stock also offers multiple early entries.
The setup follows a mixed earnings report this week for the defense giant, but LMT stock is benefiting from a likely near-term spending boost from the Pentagon and longer-term spending increases from key allies in the wake of Russia's invasion of Ukraine.
Other defense stocks, like Raytheon and General Dynamics, are also nearing buy points ahead of earnings next week.
LMT Stock
Shares of Lockheed Martin, which makes fighter jets like the F-35 and an array of missile systems, rose 1.5% to 445.79 in the stock market today. The stock was in a flat base with a 489.90 buy point. That follows a strong run-up from a long consolidation at the start of Russia's Ukraine invasion in late February.
LMT stock has retreated this past week, but there is an upside. Shares had been rising in light volume over several weeks. The recent drop provides more of a shakeout.
Investors could buy LMT stock now as it bounces off its 10-week line, though they might wait for it to also cross the 21-day line. Investors could also buy the stock if it passed Tuesday's high of 475.50.
Keep in mind the weak market action should make investors cautious about any new purchases.
Among other defense stocks, Raytheon fell 1.2% to 100.49 on Friday. Shares were in a flat base with a 104.44 buy point. General Dynamics, down 0.5% to 240.93, was in a flat base with a 255.09 entry.
Elsewhere, Northrop Grumman was up 0.9% to 447.40 on Friday. Shares were in a cup-with-handle base 477.37 buy point. L3Harris Technologies, up 0.7% to 247.88, was in a flat base with a 279.81 buy point.
All four have pulled back to around their 10-week lines. All four of those companies report earnings next week.
A 'Deterrent Company'
Lockheed Martin this week reported first-quarter earnings per share that beat expectations. But sales missed. The company's full-year outlook is also slightly below FactSet's current forecasts. LMT stock fell after the report.
Lockheed, on its earnings call, said the omicron surge earlier this year affected operations and its supply chain.
After Russia invaded Ukraine, CEO James Taiclet said "the value of strong deterrence to war as an instrument of nation's geopolitical strategy has not been as great since the middle of the 20th century." He said Lockheed was "aggressively positioning" itself as a "deterrent company."
Since the war began, the U.S. has committed roughly $3.4 billion in military equipment and other assistance to Ukraine. That equipment has included Lockheed Martin and Ratheon's Javelin anti-tank missiles and Raytheon's Stinger air-defense missiles.
More broadly, the Biden administration has proposed a defense budget of $813 billion for fiscal 2023, which would represent a 4% increase over the prior year, as Russia's war in Ukraine escalates and tensions with China endure.
Several European nations have recently said they would boost their defense spending. Germany has announced plans to buy 35 Lockheed F-35 jets. Canada also plans a big F-35 purchase.
