All things STOCKS
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Thunder Good-Oil
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It’s getting really hard to spot the next rounds of winning stocks. The news distribution is now instant. Algorithmic trading moves stocks as soon as news drops.
I’m counting on the themes of an aging US population and e-commerce. Autonomous Vehicles and robo taxis will fit well with the aging population. Electric Vehicles fit well with AVs. Artificial Intelligence will make a lot of industries more efficient. I think that the investment opportunities will be with the consumers of AI.
Energy and utilities have a big opportunity with charging EVs and keeping the AI chips cranking (and cooled). Crypto will keep on growing, but that’s more of an opportunity for the brokers and exchanges. RobinHood (HOOD) probably - although the major players on Wall Street could muscle them out of the way. It’s probably a good idea to hold some Bitcoin and maybe a couple of other CCs, but I’m not an advocate of the thousands of other names (are they considered brands yet?). Weird that Bitcoin is the big dog, but nobody (as far as the commoners know) knows exactly who’s behind it. The currencies don’t produce anything so the investment potential of owning them is pure speculation that somebody else will pay more for them than you did. At least with gold, silver, platinum, and other metals and commodities they have actual value as raw materials used to create value added products.
Peter Lynch used to be able to check out parking lots for really busy stores and factories and still have a lot of time to capitalize on what he sees. Now with the institutional program trading and the meme stocks, good ideas drive up stock prices fast and far.
Thunder Good-Oil
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Thunder Good-Oil
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Thunder Good-Oil
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I'm not a fan and support the local Co-Op. But they do usually have several cars in parking lot.
Think there are better choices for stock ownership.
Not into retail, but I slightly prefer Lowes over Home Depot. For certain items, willing to drive further to go to Lowes. Get nickel and dime stuff at Home Depot.
I just follow a group of 20-30...don't see any super screaming BUY BUY BUY.
Instead of a Money Market, I started using MSFT as a holding account. Fairly certain it isn't going down anytime soon...
If it does, then that would be a BUY BUY BUY!!!
If I was going to buy something this morning:
MSFT or LMT either for under $475
RTX for under $148
Thunder,
I know Lockheed Martin has some defense stuff that will be in demand within NATO and Israel. IMO, losing a U.S. order for 24 of the F-35's doesn't hurt as bad because other countries want the Joint Strike Fighter.
Any idea how bad the Space Exploration stuff is hurting them? Unsure what else they do besides defense. Realize there is a lot going on...Aerojet Rocketdyne, many others under the umbrella, etc
Thx!
Thunder Good-Oil
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Honestly, I don’t follow LMT real closely since I expect to hold it forever. I have it in taxable account with a very small basis on some shares and a larger basis on shares I’ve held for 4-5 years. It pays a good dividend and is critical for national security. I think they’ll continue to win government contracts. I’m also not nearly as knowledgeable about specific military aircraft as many on other threads are. But they probably are very dependent on the F-35 as a major component of their business model. I wonder if it’s close to the end of its run but then I’m reminded that the B-52 (Boeing) is still a huge part of the defense mix and it’s in what? The 8th or 9th decade. It was alarming though that I don’t think an F-35 had ever been lost in a conflict and Iran shot down 3 of them last week.
Seems like they’ve always been a big subcontractor in space. I think that they’re in the running for a major part of the replacement for the ISS if not the lead contractor.
I think that LMT is a very reasonably priced stock at a 20x P/E ratio and 17x forward on expected earnings. The market cap is only slightly over $100 billion. Yield is nearly 3%. Earnings per share are close to twice the dividend payout. Shares are well off of the all-time and 52 week highs. It just seems like a long term, steady grower that also has alternate revenue instead of 100% defense applications. But no doubt, defense is their core. They’re vulnerable to cuts in defense spending which IMO has a lot to do with shares trading at $476 with a 52 week range of $419 - $619.
Thunder Good-Oil
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I thought that these comments on a Morningstar report were interesting:
Defense Sector: Stocks Rally on Iran Strikes; Fair Value
Estimates Unchanged
Analyst Note Nicolas Owens, Equity Analyst, 13 Jun 2025
On June 13, Israel launched a series of strikes against Iranian facilities and personnel targeting its nuclear enrichment and armament programs. Shares of global defense contractors appreciated as much as 4% in early trading in reaction to the news.
The bottom line: We view the rally in defense stocks as an exaggerated reaction to news of renewed conflict in the Middle East. As we have pointed out before, the dots between military combat and the profit of a defense contractor do not connect nearly as directly as investors seem to imagine.
We have not altered our valuations of defense contractors in light of this news, and we believe long-term development and resupply of missile defense technology are already baked sufficiently into our forecasts.
Big picture: Armed conflict does not necessarily benefit defense contractors fundamentally, especially if the conflict is prolonged and expensive.
In the short term, munition resupply orders can add to sales, though these are not usually big
relative to total revenue.
But a drawn-out conflict could sap military budgets and divert funds to operations and logistics, and away from research, development, and procurement, where defense contractors make the bulk of their money.
Defense Sector: Stocks Rally on Iran Strikes; Fair Value
Estimates Unchanged
Analyst Note Nicolas Owens, Equity Analyst, 13 Jun 2025
On June 13, Israel launched a series of strikes against Iranian facilities and personnel targeting its nuclear enrichment and armament programs. Shares of global defense contractors appreciated as much as 4% in early trading in reaction to the news.
The bottom line: We view the rally in defense stocks as an exaggerated reaction to news of renewed conflict in the Middle East. As we have pointed out before, the dots between military combat and the profit of a defense contractor do not connect nearly as directly as investors seem to imagine.
We have not altered our valuations of defense contractors in light of this news, and we believe long-term development and resupply of missile defense technology are already baked sufficiently into our forecasts.
Big picture: Armed conflict does not necessarily benefit defense contractors fundamentally, especially if the conflict is prolonged and expensive.
In the short term, munition resupply orders can add to sales, though these are not usually big
relative to total revenue.
But a drawn-out conflict could sap military budgets and divert funds to operations and logistics, and away from research, development, and procurement, where defense contractors make the bulk of their money.
Thank you Thunder! That summary is most reassuring.
When it is all said and done, I don't think there will be as big of cut in defense as people seem to currently think. There will be cuts in the humanities, diversity, peace corps, space, etc.
At the end though, like myself, the Trumpster is way too old to learn how to speak Chinese, Russian, or Iranian. Think he can offset those cuts with increased Foreign Military Sales to Israel and everyone with a border touching Russia. Plus, the Australians...they always want one of everything.
Thunder Good-Oil
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Also:
Bulls say: Other than as a tactical rotation to a sector generally insulated from macro shocks such as the oil price spike that also accompanied the Israel-Iran news, we hear two narratives to justify snapping up defense contractors. Neither holds much fundamental water in our view.
First, the idea that combat fuels more purchases of weapons made by a given firm and makes that company's stock worth more ignores how long in advance militaries procure weapons, subject to strategic and political constraints.
Second, that increased geopolitical instability broadly stimulates defense budgets, and thus defense contractor revenue is more logical. Still, we don't see incremental upside to global defense spending from the super cycle we already forecast.
Business Strategy & Outlook Nicolas Owens, Equity Analyst, 29 Jan 2025
Lockheed derived nearly 75% of its $71 billion in 2024 sales servicing contracts from the US Department of Defense, the largest military budget on Earth, and stands to operate the largest defense procurement program ever awarded (F-35) through the 2060s. Thus, as a bet on the defense industry, Lockheed is
hard to beat. Biggest isn't always best, but Lockheed (and investors) benefit from the sheer scale of its tens of billions of dollars of contracts that provide defined decades long revenue and profit streams.
Lockheed should benefit from recent and foreseeable increases in US defense spending, driven in the short term by orders to resupply munitions expended in Ukraine far faster than they can be made.
Longer term, the Pentagon has prioritized modernization of the military's ability to counter aggression from multiple so-called great power rivals, namely China and Russia, while also managing threats from terrorism and hot spots like Iran and North Korea.
Defense budgets usually ebb and flow with a nation's wealth and its perception of danger. In the US, both have been on the rise, and among many allies, notably Germany and Japan, geopolitics is leading to larger military budgets than we've seen for decades. For perspective, we estimate that the portions of the US defense budget relevant to contractors like Lockheed and its many subcontractors shrank between 2011-16 by 3.7% annualized while these budgets grew between 2016-22 by 6.6% annualized.
We think defense procurement budgets will continue to grow with modernization, but more moderately around 3.0% over the next five years.
We think Lockheed Martin's exposure to the F-35 program, hypersonic missiles, and the militarization of space align it well with areas of spending prioritized in the US defense budget. In the current environment, though, the constraint on the defense sector's opportunity is not access to defense spending or the size of budgets, but rather the ability to deploy enough skilled employees (often requiring security clearance) and specialized components and materials (that are lately in short supply)
to execute on the programs on time and on budget.
Bulls say: Other than as a tactical rotation to a sector generally insulated from macro shocks such as the oil price spike that also accompanied the Israel-Iran news, we hear two narratives to justify snapping up defense contractors. Neither holds much fundamental water in our view.
First, the idea that combat fuels more purchases of weapons made by a given firm and makes that company's stock worth more ignores how long in advance militaries procure weapons, subject to strategic and political constraints.
Second, that increased geopolitical instability broadly stimulates defense budgets, and thus defense contractor revenue is more logical. Still, we don't see incremental upside to global defense spending from the super cycle we already forecast.
Business Strategy & Outlook Nicolas Owens, Equity Analyst, 29 Jan 2025
Lockheed derived nearly 75% of its $71 billion in 2024 sales servicing contracts from the US Department of Defense, the largest military budget on Earth, and stands to operate the largest defense procurement program ever awarded (F-35) through the 2060s. Thus, as a bet on the defense industry, Lockheed is
hard to beat. Biggest isn't always best, but Lockheed (and investors) benefit from the sheer scale of its tens of billions of dollars of contracts that provide defined decades long revenue and profit streams.
Lockheed should benefit from recent and foreseeable increases in US defense spending, driven in the short term by orders to resupply munitions expended in Ukraine far faster than they can be made.
Longer term, the Pentagon has prioritized modernization of the military's ability to counter aggression from multiple so-called great power rivals, namely China and Russia, while also managing threats from terrorism and hot spots like Iran and North Korea.
Defense budgets usually ebb and flow with a nation's wealth and its perception of danger. In the US, both have been on the rise, and among many allies, notably Germany and Japan, geopolitics is leading to larger military budgets than we've seen for decades. For perspective, we estimate that the portions of the US defense budget relevant to contractors like Lockheed and its many subcontractors shrank between 2011-16 by 3.7% annualized while these budgets grew between 2016-22 by 6.6% annualized.
We think defense procurement budgets will continue to grow with modernization, but more moderately around 3.0% over the next five years.
We think Lockheed Martin's exposure to the F-35 program, hypersonic missiles, and the militarization of space align it well with areas of spending prioritized in the US defense budget. In the current environment, though, the constraint on the defense sector's opportunity is not access to defense spending or the size of budgets, but rather the ability to deploy enough skilled employees (often requiring security clearance) and specialized components and materials (that are lately in short supply)
to execute on the programs on time and on budget.
Thunder Good-Oil
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Thunder Good-Oil
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