"Investors should be well rewarded in the coming years by buying with major U.S. defense companies at current prices," says Gregory Dorsey.
The contributing editor to Stephen Leeb's Income Performance Letter explains, "The U.S. has more than doubled our sales of armaments to foreign nations over the past three years. And regardless of who wins the election, we expect this to continue."
"We're adding one for growth and income to our portfolio now. Lockheed Martin (NYSE: LMT) is a premier defense contractor. It's best known for its fighter jets.
"For example, Lockheed is now developing the F-35, also known as the Joint Strike Fighter, the replacement for the current generation of front-line fighters.
"But the company is actually engaged in four broad business areas, each of which should enjoy strong growth for years to come.
"In addition to combat aircraft, its Aeronautics business includes air mobility, special mission and reconnaissance aircraft, and advanced development programs.
"Its Electronic Systems division includes missiles and fire control, maritime systems and sensors, platform integration, training simulators and energy programs.
"The company serves intelligence, defense and civil agencies via its Information Systems and Global Services business. Lockheed's Space Systems business offers launch services, satellites and strategic & defensive missile systems.
"Lockheed's order backlog approaches a stunning $75 billion across diversified operations. Lockheed has all the valuation characteristics we like to see in a stock.
"It's trading at a price/ernings multiple of just 13 based on year-ahead earnings and it's expected to generate annual double-digit profit growth over the next several years.
"The company's operating margins are rising and it's generating tons of free cash flow. Lockheed is putting that cash to work in a number of ways, including paying down debt and buying back shares.
"And while the stock currently yields a modest 1.6%, its low 21% payout ratio means the company is likely to continue hiking its dividend, as it has in each of the last five years."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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