LMT: 3 Stocks to Buy if You Think Trump Will Get Re-elected

The United States general elections of 2020 has the world on edge. The representatives from each party have assumed completely opposite stances on some of the biggest issues grappling the country. This has divided voters into right-wing or left-wing supporters. This election not only plays a major role in the future of America, but is also driving any future global political scenario.

Though Democratic nominee Joe Biden is currently leading the poll, President Donald Trump has a history of defying expectations, as seen in the 2016 elections. Trump has received widespread support from people at his rallies. Despite being diagnosed with COVID-19 just a few days ago, Trump’s recent rallies have attracted thousands of people. This suggests a high chance of Trump getting re-elected for a second term, even if polls currently reflect otherwise.

One of the biggest policies advocated by Trump in his re-election bid is the protection of the Second Amendment. Also, his foreign policies have generated the need for having a well-equipped defense system. As a result, arms manufacturers like Lockheed Martin Corporation (LMT) and Sturm, Ruger & Company, Inc. (RGR) should perform well in the upcoming years under a second Trump administration. Also, it is no secret that Trump’s tweets are widely popular among the masses, so much so that he is one of the most followed people on Twitter (TWTR). Hence, his re-election should bring more interesting tweets, which could lead to millions of users joining the social media platform.

Lockheed Martin Corporation (LMT)

LMT is a security and aerospace company which operates in four segments: Aeronautics, Missiles and Fire Control, Rotary and Missions Systems and Space Systems. President Trump has advocated for the importance of the Second Amendment, which allows individuals to own guns. He also announced his intention of privatizing the space industry, starting with the international space station. Given the current geo-political turmoil between the United States and China, US. is rapidly upgrading its defense equipment to be well-prepared if things turn south.

As a leading manufacturer of guns and ammunition for the defense industry, and a prominent player in aerospace, LMT has potential for huge gains if Trump gets re-elected for a second term.

LMT designed the technology behind the aeroshell to protect NASA’s newest Mars rover, deployed on July 31^st. LMT also designed the Mars helicopter delivery system for Martian surface delivery. The company is currently collaborating with the University of Colorado to launch a new space mission.

The US government submitted a proposal to sell LMT’s F-35 fighter jets to Canada. LMT’s Littoral Combat Ship (LCS) was added to the US Navy Fleet on August 24th.

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While the defense and aerospace industry has been facing headwinds amid the global pandemic, LMT’s net revenues increased 12.5% year-over-year to $16.20 billion in the second quarter that ended June 2020. Net earnings of $1.6 billion improved 14.2% from the same period last year, while business segment operating profit of $1.79 billion grew 15.4% from the year-ago value.

The consensus EPS estimate of $6.09 for the third quarter ending September 2020 indicates a 7.5% rise year-over-year. LMT has an impressive earnings surprise history as well, as it beat EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $16.1 billion for the third quarter indicates a 6.2% improvement from the year-ago value.

LMT gained more than 55% since hitting its 52-week low of $266.11 in March. The stock hit its year-to-date high of $417.62 in July.

How does LMT stack up for the POWR Ratings?

B for Trade Grade

B for Buy & Hold Grade

A for Peer Grade

B for Overall POWR Rating.

The stock is also ranked #3 out of 65 stocks in the Air/ Defense Services industry.

Twitter, Inc. (TWTR)

It’s no secret that President Donald Trump likes to tweet. His tweets are often the informal source for public announcements regarding any policies implemented by the government. He also posts regular updates about the stock market under his handle, particularly about the performance of benchmark indices when the market closes.

On September 17^th, TWTR announced a collaboration agreement with WebMD to promote health awareness. As part of the partnership, health related WebMD topics would be available on the Twitter feed, thereby reaching out to a larger audience. Given the 8-month long ongoing healthcare crisis, this move is expected to increase audience engagement on TWTR, as well as provide necessary insights to flatten the coronavirus curve.

On September 8^th, it was announced that TWTR partnered with Bud Light and the NFL ahead of the football season to create a first-of-its-kind virtual interactive experience. Through this collaboration, viewers can record their reactions to major moments in games, which would then be broadcasted.

TWTR’s monetizable daily activity usage (mDAU) increased 34% year-over-year to $186 million in the second quarter that ended June 2020. However, the company’s revenues declined from the prior-year quarter, due to lower advertising revenues, as a consequence of the pandemic.

The market estimates TWTR’s revenues to grow 23.8% year-over-year to $4.08 billion in 2021. The consensus EPS estimate of $0.75 for the next year indicates significant improvement over the negative year-ago value.

TWTR has gained more than 140% since hitting its 52-week low of $20 in March. The stock hit its 52-week high of $48.65 in October.

Being one of the most popular social media platforms, it is no surprise that TWTR is rated a “Strong Buy” in our POWR Ratings system. It has an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade, and a “B” for Industry Rank. In the 58-stock Internet industry, TWTR is currently ranked #3.

Sturm, Ruger & Company, Inc. (RGR)

RGR is a defense equipment manufacturer operating in two segments – Firearms and Castings. It sells federal licensed pistols, rifles, revolvers, and more through independent and wholesale distributors across the country. Trump has been an advocate of the Second Amendment throughout his presidency, and has been playing it as the centerpiece for his re-election bid. In fact, he recently announced his Supreme Court nominee to be Justice Amy Barrett, who has supportive views on gun rights.

Needless to say, RGR should continue to thrive for the next four years if Trump gets re-elected for a second term. RGR recently acquired Marlin Firearms for all cash purchase of $30 million.

RGR’s net sales grew 35.2% year-over-year to $130.26 million in the second quarter that ended June 2020. Net income and comprehensive income increased 198.4% from the same period last year to $18.59 million, while EPS rose 179.5% from the year-ago year value to $1.05. The consensus EPS estimate of $0.97 for the third quarter that ended September 2020 indicates an 86.5% growth year-over-year.

RGR gained more than 135% to hit its 52-week high of $90.74 in August since hitting its 52-week low of $38.44 in March.

In our POWR Ratings, the company has been accorded a “B” grade for Peer Grade. It is currently ranked #26 out of 65 stocks in the Air/ Defense Services industry.

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LMT shares were trading at $392.91 per share on Wednesday afternoon, up $3.96 (+1.02%). Year-to-date, LMT has gained 2.78%, versus a 9.74% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...