Investment Thesis
Lockheed Martin (NYSE: LMT) is a leading company in an attractive market with a capable management team focused on shareholder returns. We were quite surprised by the recent sell-off post the 1Q18 results. We feel that the current market is being tough on prime defense players and tends to favor players at a lower valuation with not-very-attractive end markets. The shares fell as investors were disappointed that LMT did not raise its 2018 cash flow projections even as the U.S. government spends more on defense. Given the clarity on the F-35 program and the incremental gains from the additional spending, we believe this is the right time to BUY the stock and hold it for future gains.
