It came a little later than expected, but with four trading days left in the month, the September swoon is upon us. The Dow and S&P 500 fell over 1.5% today on ongoing geopolitical tension in Ukraine and the Middle East, as well as unusually light trading volumes due to the Rosh Hashanah holiday. But while some are fretting over the pullback, I’m seeing a great buying opportunity open up. Today I’d like to draw your attention to what I consider to be the top defense play to buy on dips right now.
Lockheed Martin Corporation (LMT) is a major defense contractor. Lockheed Martin’s core businesses are aeronautics, information systems, missiles, mission systems and space systems. Between these five segments the company brings in over $45 billion in sales each year.
Lockheed Martin has been going full steam in expanding its international presence—this has helped to offset lost business in the U.S. due to defense budget cuts. Just yesterday, South Korea announced that it will purchase 40 F-35A fighter jets from Lockheed Martin, for a total price tag of $7 billion. This is the country’s largest weapons purchase ever and is a boon for Lockheed Martin.
Back on home soil, Lockheed Martin is finalizing the details on a $4 billion deal with the Department of Defense for 43 additional F-35 fighter jets. The company is also looking to reduce the cost of developing and building the 2,457 F-35 jets currently slated for production. Lockheed Martin’s order backlog remains strong, and this translates into robust estimated sales and earnings growth for the company.
In turn, this is great news for us because LMT is putting a lot of that extra cash back into the pockets of shareholders. Today Lockheed Martin announced a $2 billion boost to its ongoing stock buyback program, as well as a 13% increase in its quarterly dividend. Shareholders of record on December 1 will receive $1.50 per share on December 26.
There’s still plenty of time to add LMT shares before then, so now is a great time to add this A-rated stock before it moves higher.