As one of the premier aerospace and defense contractors, Lockheed Martin Corp (NYSE:LMT) represents somewhat of an oddity in the equities arena. Typically, geopolitical tensions aren't conducive to capital growth. For one thing, investors tend to demand higher risk premiums (relative to so-called risk-free assets like U.S. Treasuries), thereby leading to contracting multiples. Just as importantly, a flight to safety occurs, which sees commodities like gold rise.
Of course, there are important nuances to the broader capital flight narrative — one that tends to benefit defense contractors like Lockheed Martin. Geopolitical tensions boost demand for weapons, missiles and various support systems, thereby outweighing market-wide drag in many cases. For example, when Israel began launching airstrikes against Iran in June, LMT stock conspicuously shot higher.
