5 Best Defense Stocks to Buy for 2021

2. Lockheed Martin Corporation (NYSE: LMT)

Lockheed Martin Corporation (NYSE: LMT) is one of the largest companies in the aerospace sector, providing key military equipment to the U.S. government. The company recently won a $1.29 billion contract for F-35 Lightning II Joint Strike Fighter air systems for the Air Force, Marine Corps, Navy, non-U.S. Department of Defense (DOD) participants and Foreign Military Sales customers. The company sold 123 F-35 fighter jets to the U.S. and its allies in 2020.

Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital is leading the 47 hedge funds tracked by Insider Monkey which have stakes in Lockheed as of the end of the September quarter, with $479.64 million worth of shares. Here is what RiverPark Advisors said about LMT earlier in 2020:

“Lockheed Martin is the world’s largest aerospace and defense contractor. With about 70% of its $60 billion in revenue from the U.S. government, the company is well positioned to benefit from U.S. defense budget growth, historically 5-6% per year, as well as increased global military spending. With a $144 billion backlog and deliveries forecast to reach 180 aircraft per year in 4- 5 years, we believe the company could grow at a significantly higher rate than overall defense budget growth over the next several years. The Street expects mid-single-digit revenue growth for the company, in-line with overall market growth. Due to its exposure to faster-growing programs, we believe the company can exceed that growth rate, and add margin expansion from increased scale. Further, strategic acquisitions, debt pay down, a 2% dividend yield, and continued share buybacks from $6 billion per year of free cash flow should lead to even greater shareholder returns.

We are also excited about LMT’s new – CEO James Taiclet – a military veteran and, over the previous 10 years the highly respected CEO of American Tower, a long-time Fund holding. Under Jim’s leadership, AMT grew its market capitalization from $2 billion to $100 billion and as both a shareholder and US citizen we look forward to him bringing his vast array of leadership skills to LMT.”