Here's Why Shares in Lockheed Martin Popped Higher Today

Shares in the world's leading defense contractor, Lockheed Martin (NYSE: LMT), rose 3.5% on the opening of trading as the market rushed to buy into defense stocks in the wake of recent events in Venezuela. It's an understandable reaction to a ratcheting of geopolitical tensions and the creation of political uncertainty. Equating geopolitical upheaval with a more promising outlook for defense stocks makes sense, however unfortunate or fortunate the circumstances behind it may be. Still, it also makes sense to reflect on what it actually means for defense stocks. In previous decades, the calculation was relatively simple; potentially, more revenue means more profitability for defense contractors. Again, there's an obvious logic behind this approach, but investors also have to recognize that defense contractors have had significant margin challenges in recent years, not least from problematic fixed price development programs that have caused billions of dollars of cost overruns, charges, and losses at companies such as Lockheed Martin, RTX, and Boeing. Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool