We're Closing Out This Defense Name After Navy Contract Leaks
The S&P 500 rejecting its 200-day moving average ups our level of near-term caution.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
LMT | Sell | 315 | $442 | 0 | 0% |
After you receive this alert, we will sell the remaining 315 shares of Lockheed Martin LMT at or near $442. This will close out the Portfolio’s position in LMT shares, with this last slug returning a loss of around 10%.
While we were taking a “wait and see” approach with Lockheed Martin and the pending decision for the U.S. Navy’s next-gen fighter contract that is expected to be announced this week, reports are leaking that Lockheed is no longer in the running.
Earlier this week, we indicated that back-to-back losses on large multi-year defense contracts would force us to reconsider Lockheed’s competitive position. Headwinds for the company’s international business appear to be brewing amid escalating tariff tensions.
That’s a combination that will, at best, restrain the shares, and we’d rather not be around for the formal contract announcement of the next-gen Naval fighter jet, as it could push the shares even lower. We had planned to use a rebound in the shares to begin reducing the Portfolio’s exposure but gaming it out, the odds of that happening seem far less on the back of another contract loss.
Adding to this, with Thursday's market close, it’s increasingly evident that the S&P 500 rejected the move toward its 200-day moving average near 5,758. As that market indicator rebounded off its March lows, we indicated that to move higher on a sustained basis, it would need to first retest those lows near 5,500. More than likely, that is what is unfolding. The move back to that level could be fast as tariff-related uncertainty mounts and the market wraps its head around Friday's hotter-than-expected core PCE figures for February.
All of this influenced our decision to act today.
Exiting LMT shares will bring the Portfolio’s cash position up to around 12% of the Portfolio’s assets, giving us ample firepower when the time to strike is at hand. We will continue to focus on well-positioned companies with superior EPS growth prospects, similar to our recent additions of Axon AXON and Palantir PLTR.
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(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long LMT, AXON and PLTR.
