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Lockheed Martin On A High, But For How Long?

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Lockheed Martin On A High, But For How Long?
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Lockheed Martin Corporation (NYSE: LMT) shares have been on a strong trajectory upward since the 2011 low and easily shook off the short-term bearish vibe that developed earlier in October.

With projected long-term resistance coming into play just above current levels at $192, does Lockheed Martin have the fundamental goods to push the stock through the prospective ceiling?

What The Bulls See

  • An attractive 3.2-percent dividend yield
  • Some cheap valuation metrics, including:
  • An enterprise value of $61.74 billion versus a market capitalization of $59.44 billion
  • A price-to-sales of 1.31
  • 7.17 percent net profit margins that spin-off more than $3.90 billion
  • A reasonable current ratio of 1.13

Related Link: Lockheed Announces Purchase Of Systems Made Simple

What The Bears See

  • Some expensive valuation metrics, including:
  • A PE of over 16 versus estimated revenue and earnings growth for 2015 of -1.4 and +3 percent, respectively
  • A price-to-book ratio of 12.80
  • A heavy debt burden as evidenced by the 134.78 percent debt-to-equity ratio

The Technical Take

Technicians note that Lockheed Martin shares are just about at their long-term upside target at $192 –- the 161.8 percent Fibonacci price projection for what appears to be a third wave macro move to the upside.

Of course, they note, Lockheed Martin could break through to the upside and move up to the next Fibonacci projection at $271.66, but that would seem to be more of a long-shot at this point given the extreme overbought readings that are popping up on the daily chart.

When looking at the monthly chart, the nearest key support for Lockheed Martin comes in at the June monthly close at $160.36. However, if wave five on the chart were to roughly match wave one in magnitude, then a pull back all the way down to the $120-$121 range would occur.

Overall

Brave shorts will be looking to fade this rally in Lockheed Martin once the projected target at $192 is approached or tested. Most technicians would caution against shorting into such a strong uptrend. However, as long as stops are honored, anything can be tried in the markets.

Stock chart: 
Stock chart

Posted-In: Bear Market Bull Market Fibonacci price projectionTechnicals Trading Ideas Best of Benzinga

 

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