Northrop Grumman Corporation: Triple-Digit Upside for NOC Stock?

noc stockMore Upside for NOC Stock?

Northrop Grumman Corporation (NYSE:NOC) stock had a lackluster week.

Shares dropped approximately 0.4%, but that may have been just some profit-taking. After all, Northrop stock is flying higher than ever.

Over the past month, NOC stock has gained 1.81%, including a temporary loss after the Brexit vote. Taking the Brexit effect out and using June 27 as the start date, NOC stock has actually gained 3.26%. Year-to-date, NOC stock has gained 17.93%.

This is no fly-by-night stock either. Northrop stock has a curve that could serve as the textbook definition of “robust.” Its series of landmark yearly increases can truly make those who haven’t invested in NOC stock jealous to the point of rage. NOC stock has risen more than 31% since a year ago and 79.96% since two years ago. Had you bought NOC in 2011, five years ago, you would have quadrupled your investment.


Where Is NOC Stock Going Next?

Northrop Grumman is known for making stealth bombers, but you would be forgiven for confusing it with a cow—a cash cow. Now, Northrop Grumman appears to have reached a resistance point of $223.50 per share with a zone of support in the high $218.00-per-share range.

The oft-used phrase of Star Trek fame—“resistance is futile”—makes sense in the case of Northrop stock. The chart points to a steady rise and has roughly gained 10% every quarter.

Based on that, NOC stock could move toward $245.00 per share by October. The only risks that can stop that climb are of the “black swan” variety, such as a sudden landing of world peace on the front lawn of the White House, ending all wars and stopping all crime. Needless to say, I would not bet on that.

The latest Northrop technology to be showcased in action could mark the start of a revolution in policing. Quite literally, the era of Robocop has arrived and it belongs to Northrop.

After being encircled for several hours, Micah Johnson, the suspected gunman who shot five police officers in Dallas last week, was killed by a remote-controlled robot carrying a bomb. This was the first time the technology was used by American law and order. While the technology is guaranteed to stir controversy and a number of ethical problems, police robots are not going to go away. They are the next step in the trend to militarize police forces. As the threat of terrorism persists, it does not take J. Edgar Hoover to figure out that robots will make evading the law all the more difficult.

Military technology experts believe that the use of a robot to kill a person has significant implications, both technological and legal, for the police forces of the 21st century. Such devices were tested in the streets of Baghdad and Fallujah by U.S. forces. Now they are coming to a town near you. The deaths of five officers have exposed the risks that police forces have to confront and robots should help to reduce those risks. Budgets will be made to accommodate them. The Northrop Grumman “Remotec Andros F5”—that’s the full name of the robot used in Dallas—costs upward of $100,000.

For NOC to see a true commercial impact, however, two things have to happen:

  1. Prices must come down.
  2. Police robot technology must trickle down to friendlier applications, the kind that will make the average American home feel more attuned to the technological utopia of the Jetsons.

As it happens, both these things are already beginning to occur and Northrop is one of the main players in the field. As prices come down, police departments will find it harder to resist the lure of robotic police assistants. The possibilities from there are endless. (Source: “Military Robotics Makers See a Future for Armed Police Robots,” DefenseOne, July 11, 2016.)

Of course, police robots are neither the reason you should buy NOC stock nor the major factor in driving bullish sentiment on the stock. The robotics technology, however, is one of the many highlights of the wide range of sophisticated high-value-added products that Northrop makes.

Northrop, after all, is also the company that will design and make the U.S. Air Force’s (USAF) next stealth supersonic and pilotless strategic bombers, a contract that NOC stock has already won worth a conservatively estimated $80.0 billion. (Source: “Northrop Grumman Tops Expectations, Lifts Year Guidance,” The Wall Street Journal, April 27, 2016.) Northrop, largely a USAF and U.S. Navy supplier, has also branched out to the U.S. Army with special missile technology. (Source: “Northrop Grumman To Demonstrate Innovative Solutions For Army’s Future Aviation,” Yahoo! Finance, April 26, 2016.)

The Bottom Line on NOC Stock

While Northrop is smaller than Lockheed Martin Corporation (NYSE:LMT), a top defense sector pick, its growth might be even higher. NOC stock has been reflecting this potential in its steady rise.

Even if you’re a liberal, NOC stock is one to consider at the very least. After all, the pleasure of seeing your savings rise or spending money doesn’t discriminate between political parties and ethical tendencies.