New Trade for November 17th, 2022

Stocks ticked lower this morning as markets reacted to comments from Fed policymakers that pointed to continued rate hikes. “The change in monetary policy rate is not yet in a zone that may be considered sufficiently restrictive,” St. Louis Federal Reserve President James Bullard said in a speech today. Just last week, smaller-than-expected increases in consumer and producer prices fueled hopes that inflation had peaked and the Fed would back off from its aggressive rate hikes. 

Many hoped the market had reached its bottom, but an increasing number of Wall Street pros predict the rout will continue in the face of looming recession concerns. Our featured stock of the day is a reasonably priced, recession-resistant stock offering a reliable payout. 

It should be no surprise that the defense giant  Lockheed Martin (LMT) has outperformed the market this year. There are obvious geopolitical implications with the war in Ukraine. When Russia decided to invade its neighbor, both U.S. and European forces rushed in to help Ukraine. It may be some time before LMT stock pops again, as it did at the onset of Russia’s invasion of Ukraine. However, its order books are likely to improve due to rising defense budgets in the U.S. and abroad. Along with Lockheed providing support to Ukrainian resistance fighters, the looming uncertainties in Russia could lead to massive economic problems and gaps in power in the former Soviet Union-controlled areas. 

Given the recession-proof nature of defense contracting, Lockheed Martin should continue reporting positive results and rewarding shareholders through its quarterly 2.7% forward yield. In other words, even if the market dives again, LMT will likely stand firm. The company runs a P/E ratio of 24 times, below the sector median of 28.3 times. As well, LMT features excellent longer-term growth and profitability metrics.