Title:   Trading Alert (Re-post) — Lockheed Martin (LMT): bullish at 17x vs S&P 21x; Patriot (MIM-104) shortage a multi-year production tailwind; Ultra Maritime acquisition the drone/naval pivot
Show:    Haymaker Daily (Substack) — Trading Alert (re-post to the paid tier) — paid
Guest:   David Hay / The Haymaker Team (Haymaker; co-founder/ex-CIO Evergreen Gavekal)
Date:    2026-JUL-11
URL:     https://haymaker.substack.com/p/trading-alert-2aa
Length:  written post (no timestamps)
Note:    Paid written post, verbatim text. A re-post to the paid tier of the Founding-Members/Ringside-Access "Premium Trading Alert" originally sent 2026-07-09 (archived as the gated thin page at archive/2026-jul-09-alert/). Referenced Bloomberg charts (10-yr price, 5-yr price with overhead resistance, 10-yr P/S & P/E) were not captured. Body reproduced for personal study.

Hello, Haymakers:

Today, we're re-posting a Trading Alert that went out to our Founding Members (Ringside Access) on July 9th. If you'd like to see these a couple days earlier, consider upgrading your subscription. And as always, thank you for your continued support of the Haymaker project.

Believe it or not, this Trading Alert is not about energy! However, we are definitely pleased by the snazzy snap-back with oil and oil-related stocks of late (notwithstanding today's retracement).

Rather, this edition is focused on a former highlighted name from the U.S. defense industry, Lockheed Martin (LMT). As you can see in the first chart below, it's been in a steady, albeit unspectacular, up-trend over the past decade.

[10-Year Price Chart — Bloomberg]

Zooming in tighter to focus on recent price action, LMT has experienced another of the sharp corrections to which it's been subject in the years following Russia's merciless attacks on Ukraine. Of course, this year has brought another major conflagration, the allegedly resolved U.S./Israel war against Iran.

[Five-Year Price Chart (overhead resistance displayed) — Bloomberg]

We've been skeptical — actually, very skeptical — that peace has enduringly broken out in the Persian Gulf. Recent events have validated that as well as our highly contrarian bullish stance on oil.

Similar to our incredulity about oil trading in the upper 60s last week, despite a massive supply shock, we're also bemused by the fact that LMT has essentially flat-lined over the past four years. This has been despite a couple of breakouts above prior resistance and healthy upside follow-throughs after those.

Bears on defense stocks in general, and LMT in particular, have adopted a similar attitude toward this group as they did with oil: basically, the shooting war is in the rear-view mirror. Therefore, why hold U.S. defense stocks? As you can see below, this has left LMT trading at one of its lowest Price/Sales and P/E ratios of the past decade. Its P/E is now just 17, compared to the S&P 500 at 21x.

[10-Year Price/Sales and P/E Ratios — Bloomberg]

Additionally, LMT's earnings aren't inflated by extraordinary items. This in contrast to the S&P where the heavy hitters, like Google, are recording massive non-recurring gains on investments in private companies (many of which are also their customers).

Over the years, we've done a decent job of suggesting accumulation of LMT on weakness and gain realization into strength. On the latter score, our clearest trim recommendation was in October 2024, when it was around $600. Our most recent positive highlight was last September at roughly this price. (For sure, we should have proposed an additional trim when it rocketed to near $700 shortly thereafter.)

Another knock on the stock is that U.S. high-tech, and high-cost, weaponry has disappointed in New Age warfare. Clearly, drones have become the stars of both the Ukraine and Iran conflicts. This was a shift we anticipated back in April of 2022 with our Send In The Drones piece, co-authored with Louis-Vincent Gave.

Yet, right up there with drones has been the exceptional performance of the Patriot missile defense system (MIM-104). This is one of LMT's most important programs. Ukraine has expended nearly all of its Patriot inventories and may soon attempt to domestically produce them. Given the complexity, that may be challenging, but you can't sell the Ukrainians short when it comes to ingenuity.

However, the Patriot shortage is a global problem, even in the U.S. Consequently, production of these life-saving systems is nearly certain to be strong for years to come.

Further, defense spending is surging around the world. Some of that will be spent with domestic companies, particularly in Europe. The reality is, though, that non-U.S. defense companies are comparative newbies when it comes to producing sophisticated weapons systems, particularly at scale. An exception to this is China. However, most countries are likely to be hesitant (for obvious reasons) to buy critical defense components from companies closely tied to the Chinese Communist Party.

It's also probable that the big U.S. military contractors are going to pivot toward next-generation armaments like drones, both aerial and marine-based. In fact, LMT just announced the acquisition of Ultra Maritime, a fast-growing naval defense (and offense) technology enterprise. It won't be a surprise if it seeks to acquire Ukrainian drone producers.

There are, of course, risks. One that has the potential to be highly disruptive would be a decisive break above 4.6% on the U.S. T-note and north of 5% on the 30-year T-bond. This could indicate an inability for America to continue living, and spending, beyond its means, including on "defense" (lately, that seems to have become a euphemism).

But at an undemanding 17 times earnings, we are bullish on this name. Another run-up, possibly to a new all-time high north of $700, strikes us as highly likely. Sometimes, the best offense really is a good "D"… or, in this case, one of the USA's finest defense contractors, a company that has, for decades, been a linchpin of Pax Americana.

The Haymaker Team