5 Undervalued Defense and Military Stocks to Buy Now

1. Lockheed Martin Corporation (NYSE:LMT)

Number of Hedge Fund Holders: 42   

PE Ratio (as of March 10): 19.52

Lockheed Martin Corporation (NYSE:LMT) ranks first on our list of undervalued defense stocks to buy. 42 hedge funds reported owning shares in the firm as of Q4 2021, with holdings worth $976.1 million. D E Shaw held the biggest stake in Lockheed Martin Corporation (NYSE:LMT) at the close of the fourth quarter, worth $171.4 million and comprising of 482,000 shares. This represented a 59% increase in holding from the previous quarter.

With a market cap of $122.2 billion, Lockheed Martin Corporation (NYSE:LMT) is one of the biggest defense firms in the world, having served the US government for decades. It produces fighter jets, unmanned drones, military and commercial helicopters, air and missile defense systems, and other services related to national security systems. The firm reported earnings per share of $7.24 for the fourth quarter, beating estimates by $0.10. Revenue for the Q4 stood at $17.73 billion, beating analysts’ forecasts by $71.71 million and signaling a 4.09% increase from the year-ago period.

On February 28, Wolfe Research analyst Michael Maugeri upgraded Lockheed Martin Corporation (NYSE:LMT) to ‘Outperform’ from ‘Peer Perform’ and set a $467 price target, noting that stocks in the defense sector would face significant upside in the coming months as the Russian invasion of Ukraine increases military spending around the world. He likes Lockheed’s outsized exposure in the global market, and strong demand for its aeronautics products.

Here is what RiverPark Advisors, LLC had to say about Lockheed Martin Corporation (NYSE:LMT) in its Q4 2020 investor letter:

“Despite better-than-expected third quarter results, LMT shares were weak for the quarter as defense spending is expected to be flat for the coming year. With a record $150 billion backlog and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year in 4-5 years (3Q’s revenue upside was from the F-35), we believe LMT should grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions (LMT acquired AJRD for $4 billion in late December), debt pay down, a 3% dividend yield, and continued share buybacks from $6 billion per year of free cash flow should lead to even greater shareholder returns.”

You can also take a look at 10 Best Communication Equipment Stocks To Buy and 10 Best Solar Energy Stocks To Buy Now.

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