This Could Be Big for Lockheed Stock
Lockheed Martin Corporation (NYSE:LMT) continues to trade within its all-time highs. LMT stock costs $217.00 per share, within range of its $225.00-per-share all-time high from last November. Lockheed Martin can count on major government defense contracts. Yet, the maker of the “F-35” and “F-22” continues to expand its civilian and commercial portfolio as well. These are all good signs for Lockheed Martin stock moving forward.
Lockheed stock typically gains after the company wins a defense contract. Lockheed Martin is now attracting the sort of attention more usually associated with a Boeing. NASA has invested some $20.0 million over the next year and a half to perform preliminary research. Lockheed Martin is designing a quiet supersonic passenger airliner. The contract is the first step toward bringing back supersonic passenger jets after the retirement of the “Concorde” and Russian “Tu-144.” In the 1960s, Boeing was the major American aerospace contractor to work on a supersonic civilian airliner. LMT stock’s experimental plane could fly as early as 2020.
Supersonic flight, like few other aspects of aviation, combines the most sophisticated military and civilian technology. On March 15, Lockheed revealed that it is on the verge of a major breakthrough. It will develop military aircraft capable of traveling six-times faster than the speed of sound—that’s Mach 6 or some 4,600 miles per hour (i.e. NYC to LA in little over half an hour).
Marillyn Hewson, president of Lockheed Martin, also revealed that the builder was working on a laser weapon capable of use during ground operations.
Hewson said Lockheed’s major technological innovations would soon make their way into the futuristic weapons that defense officials have boasted for years. Until now, the results have often been lacking. There were too many promises and little to show for them. Now, Lockheed has the technology to start delivering beyond the illustrations on a computer screen or drawing board. Lockheed could build a hypersonic demonstrator aircraft the size of an F-22 stealth fighter for less than $1.0 billion. That amount is pocket-change for military programs now. (Source: “Lockheed Martin’s SR-72 Hypersonic Plane Could Be Built For Under $1B, Likely To Be Ready In 2030s,” International Business Times, March 16, 2016.)
While also helping Lockheed deliver a civilian Mach 1.5–2.0 quiet supersonic airliner, Lockheed’s hypersonic technology will endow the retired “SR-71 Blackbird” spy plane successor a major military advantage. It will be so fast that enemies will not have time to react as it hits its targets. (Source: Ibid.)
As for the engine, Lockheed has been working on a hypersonic aircraft motor with Aerojet Rocketdyne. This accelerates the development period because of Aerojet’s engine experience and Lockheed’s work on aircraft materials. (Source: “Lockheed hails progress on hypersonic military aircraft,” The Financial Times, March 15, 2016.)
Finally, Lockheed Martin’s bullish optimism is backed by a stronger U.S. defense budget, which is larger now following a few frugal years. (Source: Ibid.)
Meanwhile, Lockheed Martin is re-entering the commercial aerospace arena in a huge way—literally. More than three decades after it abandoned the “L-1011” airliner project, Lockheed will deliver a prototype airship in the next few months. Dubbed the “LMH-1,” it is a modern hyper technological version of the Zeppelins of yore. The first flight will happen in mid-2017 and customer deliveries and commercial service are expected to begin in 2018.
Target customers for this aircraft are mining and oil exploration companies. These would be able to reach remote areas at unmatched cost with unmatched payload capacity (up to 47,000 pounds and 19 passengers). The range is 1,700 miles.
In fact, with the LMH-1, Lockheed has essentially invented a new vehicle. More than an airship, it is a combination of airship, helicopter, and airplane. This marks the first of a series of vehicles to be built in progressively larger sizes. They could end up challenging oceangoing vessels thanks to their speed, energy efficiency, and payload. (Source: “Lockheed Martin Readies LMH-1 Hybrid Airship Assembly,” Aviation Week, March 16, 2016.)
The LMH-1 is not a futuristic pipedream, either. Lockheed Martin is already working on sales and it expects to build one a month, selling it for some $40.0 million per unit. (Source: Ibid.)
The combination of lucrative government defense contracts and new ventures in essential aspects of future technology give Lockheed stock the legs to sustain market crashes, recessions, booms, and busts. Few stocks offer as reliable returns as Lockheed Martin.