All things STOCKS

#18,926
#18,926
BULL CASE / BASE CASE / BEAR CASE
$450.00
$350.00
$176.00

Mutiple: ~25x P/FCF
l
Mutiple: ~22x P/FCF
l
Mutiple: ~17x P/FCF

Revenue: ~8% CAGR (2025-2028E)
Revenue: ~6% CAGR (2025-2028E)
Revenue: ~3% CAGR (2025-2028E)

EBITDA Margin: ~18%
EBITDA Margin: ~17.5%
EBITDA Margin: ~15.5%

Tax Rate: ~14%
Tax Rate: ~14%
Tax Rate: ~14%

FCF/Sh
are: $17.95

FCF/Sh
are: $16.00

FCF/Sh
are: $10.45

Within our bull case, we begin to price in a
$1tn US Defense Budget and stronger
exports.

Within our bear case, we assume program
cuts and budget uncertainty.
 
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#18,927
#18,927
I’ve heard quite a few mention stagflation on the horizon for 2026. Thoughts?

Probably leaving my TSPs untouched, but may go more conservative with brokerage account and proceeds from a home sale. What would good alternatives be in a downturn? Metals? Crypto?
 
#18,928
#18,928
PRICE TARGET
$350.00
We arrive at our price target of $350 by placing a ~22x multiple on base case 2026E
FCF/share of $16.00. This multiple represents a ~20% discount to the market, slightly below
our baseline defense multiple (~15% discount), to account for LHX’s historical discount to
Prime peers.


EQUAL-WEIGHT THESIS
LHX has wide-ranging capabilities from
radios to satellites. The combination of
Harris and L3 has created a formidable
defense contractor with significant
synergies. Higher leverage post-Aerojet
acquisition limited capital deployment
flexibility in the near-term.


GLOBAL REVENUE EXPOSURE
0-10% APAC, ex Japan, Mainland
China and India
0-10% Europe ex UK
0-10% India
0-10% Japan
0-10% Latin America
0-10% MEA
0-10% UK
70-80% North America


RISKS TO PT/RATING
RISKS TO UPSIDE
Better than expected synergies drive higher
revenue and margins
Increase in perceived or realized security
threats
New program wins driving revenue higher

RISKS TO DOWNSIDE
Supply chain pressures
Changes in mix between production,
procurement and RDT&E pressures margin
levels
New entrants from commercial players
 
Last edited:
#18,930
#18,930
Thunder Good-Oil said:
PRICE TARGET
$350.00
We arrive at our price target of $350 by placing a ~22x multiple on base case 2026E
FCF/share of $16.00. This multiple represents a ~20% discount to the market, slightly below
our baseline defense multiple (~15% discount), to account for LHX’s historical discount to
Prime peers.


EQUAL-WEIGHT THESIS
LHX has wide-ranging capabilities from
radios to satellites. The combination of
Harris and L3 has created a formidable
defense contractor with significant
synergies. Higher leverage post-Aerojet
acquisition limited capital deployment
flexibility in the near-term.


GLOBAL REVENUE EXPOSURE
0-10% APAC, ex Japan, Mainland
China and India
0-10% Europe ex UK
0-10% India
0-10% Japan
0-10% Latin America
0-10% MEA
0-10% UK
70-80% North America


RISKS TO PT/RATING
RISKS TO UPSIDE
Better than expected synergies drive higher
revenue and margins
Increase in perceived or realized security
threats
New program wins driving revenue higher

RISKS TO DOWNSIDE
Supply chain pressures
Changes in mix between production,
procurement and RDT&E pressures margin
levels
New entrants from commercial players
Click to expand...
Thanks Thunder for all the info on LHX.


I'm going to ride it out for now.
 
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#18,931
#18,931
Tri-CitiesVol said:
I’ve heard quite a few mention stagflation on the horizon for 2026. Thoughts?

Probably leaving my TSPs untouched, but may go more conservative with brokerage account and proceeds from a home sale. What would good alternatives be in a downturn? Metals? Crypto?
Click to expand...

0-10% exposure to crypto is a solid plan IMO.

Domestic materials have had a good run, but the more the US shifts to not relying on global supply channels the more it makes sense to stick with domestic suppliers for the long haul. The underlying commodities such as gold and silver have had good runs. Copper will be in demand whenever housing turns around. So perhaps mining companies with domestic operations will benefit in the long view. The federal government has even invested directly in those equities.

Healthcare has been under pressure for a good while now. Patient demographics are great. But the battle with Medicare and Medicaid over reimbursements aren’t likely to be resolved anytime soon. The federal government isn’t a limitless source of funding.

Energy and utilities are other sectors that ought to do well for a long time. AI. Crypto mining. Repatriated manufacturing. All of those things will require a lot more power than the current infrastructure can handle. Which kind of takes it full circle back to materials. Add long term prospects for industrials as well.

Nuclear specifically is on the uptrend. Events that have occurred every 10-20 years have interfered with the industry. Three Mile Island. Chernobyl. Fukushima. Plus the push back from environmentalists in the 70s and 80s drove up the costs so that new production plants weren’t economically feasible. SMR is on a run.
 
#18,932
#18,932
Look out below. The futures market indicates that the bulls are going to get obliterated at the opening bell.

Triple witching was last month, not the 3rd Friday in October (March, June, September, December).
 
#18,937
#18,937
Granola said:
Is American Express stock a buy at this price? Anyone
Click to expand...
I love American Express. For decades, used mind for most everything and took many a vacation on the earned Delta Skymiles.

However, the world has changed. Many stores give me a cash price vs credit price.

Apple Pay, Venmo, etc etc...

I gotta say credit cards are heading toward extinction.

So, my answer is no.

FWIW
 
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#18,938
#18,938
Jax_Vol said:
That was me.

As long as Putin wants to fight, LHX, LMT, RTX are the three I know that make various key production items needed for defense.

Perhaps NOC, but not as familiar with them.

LDOS is a smaller more design-oriented bunch also in the mix.
Click to expand...
RTX just spilled the beans and raised their guidance. Up 5% premarket.

Between Ukraine, Israel, all the countries bordering Russia, USA is going to sell a lot of weapons.

Plus, as I understand the current system, the tariff math favors a country buying from us.
 
#18,939
#18,939
Here is a summary for the drone discussions

Military Threat-Response Solutions Demand Rising as Global Unmanned Systems Market Projected to Reach $43 Billion By 2030
The global market for Unmanned Systems is primarily driven by the surging demand for autonomous systems, improvements in intelligence, surveillance, and reconnaissance (ISR) capabilities, and increased adoption across various industries for operational efficiency and cost savings. A report from MarketsAndMarkets said that the global Unmanned Systems Market was valued at USD 27.13 billion in 2024 and is projected to grow USD 43.54 billion by 2030, at a CAGR of 8.2% during the forecast period. In terms of volume, it is projected to reach 2,876,197 units by 2030, from 1,998,009 units in 2024. The report said: "Defense is expected to be the largest application segment in the unmanned systems market during the forecast period, driven by several factors. Primarily, unmanned systems are equipped to conduct high-risk missions, such as surveillance in hostile environments or bomb disposal, while safeguarding human lives. This capability reshapes modern warfare, emphasizing personnel safety and enabling complex operations without jeopardizing troops. In addition to improved safety, unmanned systems offer cost savings when contrasted with conventional manned options. These systems result in significant savings for defense budgets due to their decreased operational costs and maintenance requirements. Military organizations looking to make resource allocations while preserving operational capacity and readiness may find this financial efficiency appealing. The versatility of unmanned systems also stands out. These systems can be deployed across a variety of missions, from intelligence gathering to combat support and logistics. This flexibility allows defense forces to respond effectively to changing operational needs, thus improving mission success rates. The rapid advancement of technology keeps enhancing the potential of autonomous systems. Their strategic value is increased by their growing ability to operate remotely or autonomously." Active Companies leading the way in military & defense operations include VisionWave Holdings Inc.(VWAV),Kratos Defense & Security Solutions, Inc., AeroVironment, Inc.(AVAV), L3Harris Technologies(LHX), RTX Corporation(RTX).
 
#18,940
#18,940
Jax_Vol said:
Here is a summary for the drone discussions

Military Threat-Response Solutions Demand Rising as Global Unmanned Systems Market Projected to Reach $43 Billion By 2030
The global market for Unmanned Systems is primarily driven by the surging demand for autonomous systems, improvements in intelligence, surveillance, and reconnaissance (ISR) capabilities, and increased adoption across various industries for operational efficiency and cost savings. A report from MarketsAndMarkets said that the global Unmanned Systems Market was valued at USD 27.13 billion in 2024 and is projected to grow USD 43.54 billion by 2030, at a CAGR of 8.2% during the forecast period. In terms of volume, it is projected to reach 2,876,197 units by 2030, from 1,998,009 units in 2024. The report said: "Defense is expected to be the largest application segment in the unmanned systems market during the forecast period, driven by several factors. Primarily, unmanned systems are equipped to conduct high-risk missions, such as surveillance in hostile environments or bomb disposal, while safeguarding human lives. This capability reshapes modern warfare, emphasizing personnel safety and enabling complex operations without jeopardizing troops. In addition to improved safety, unmanned systems offer cost savings when contrasted with conventional manned options. These systems result in significant savings for defense budgets due to their decreased operational costs and maintenance requirements. Military organizations looking to make resource allocations while preserving operational capacity and readiness may find this financial efficiency appealing. The versatility of unmanned systems also stands out. These systems can be deployed across a variety of missions, from intelligence gathering to combat support and logistics. This flexibility allows defense forces to respond effectively to changing operational needs, thus improving mission success rates. The rapid advancement of technology keeps enhancing the potential of autonomous systems. Their strategic value is increased by their growing ability to operate remotely or autonomously." Active Companies leading the way in military & defense operations include VisionWave Holdings Inc.(VWAV),Kratos Defense & Security Solutions, Inc., AeroVironment, Inc.(AVAV), L3Harris Technologies(LHX), RTX Corporation(RTX).
Click to expand...

I’ve been watching AVAV and I want to get back in. I sold some well out of the money covered calls and tge share price took off. A lot of opportunity cost left on the table. Looking at the market cap, it might never revisit the share prices from several months ago. They are small enough that a big defense company, like LMT or NOC, could buy them.
 
#18,948
#18,948
Jax_Vol said:
Lol!

Looks like we can grab some for a 5% discount.

Think I'm going to pass on that opportunity. Really thought he would have the robotaxi stuff booming by now in many large cities.
Click to expand...

The government regulators control the AV timelines. Hopefully we’ll have fully autonomous vehicles within 5 or 10 years.

Google/Waymo seems to be ahead of the others right now.
 
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