Summary
U.S. military spending growth may have reached a high point.
Price and volume momentum trading trends in November-December point to extended Lockheed underperformance of the market for 2019.
The stock valuation is quite stretched using simple historical ratio analysis.
The company holds excessive financial leverage, much greater than just before the last recession.
Lockheed Martin (LMT) is richly priced, overleveraged, and could be on the verge of witnessing a large drop in government outlays for military equipment. The maker of fighter jets, ships, helicopters, drones, satellites, missiles and more has skidded into a rough patch on Wall Street this year. Over the last six weeks of trading, Lockheed’s 200-day moving average has turned down for the first time since the 2011 U.S. government budget battle/agreement holding military spending in check for years. Investors should be concerned about the Lockheed Martin long-term ownership thesis. I personally shorted shares last week.
