With rising geopolitical tensions, investors have been pushing defensive names higher. That includes gold, which has hit new all-time highs. Oil has had some small spikes higher, but nothing major yet.
One big winner from this rising trend is defense contractors. Military spending is likely to increase, both domestically and abroad, and major U.S. contractors will likely reap the largest benefits, especially those companies that also help supply American allies.
In the defense space, aerospace contractor Lockheed Martin (LMT) could see further gains. Lockheed just reported a beat on earnings and sales.
Shares haven’t been caught up in the recent market rally, and are down 3% over the past year. However, with earnings and sales on the mend, shares could see some growth from here.
At current prices, Lockheed trades at 17 times earnings, a slight discount to the overall market.
Action to take: Investors may want to buy a partial stake now, and use any drop to add to that position. Lockheed is also a dividend growth stock, with a current payout of 2.7%.
For traders, shares are trending higher and may be on the cusp of a breakout.
The September $515 calls, last trading for about $5.50, could see mid-double-digit returns on a break higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.