Daily Stock Pick: November 3rd, 2022

Earlier this month, Goldman Sachs CEO David Solomon warned that there’s a “good chance” that the U.S. is headed for a recession. His warning echoed a similar one from JPMorgan Chase CEO Jamie Dimon, who predicted that the U.S. is most likely headed for a recession in six to nine months. Amazon founder Jeff Bezos also recently tweeted that it’s time to “batten down the hatches” as recession conditions formulate.

Some may be trying to call a bottom for the market, but an increasing number of Wall Street pros predict the rout will continue in the face of a looming recession. Our recommendation for today is a reasonably priced, recession-resistant stock offering a reliable payout. 

It should be no surprise that defense giant  Lockheed Martin (LMT) has outperformed the market this year. There are apparent geopolitical implications with the war in Ukraine. When Russia decided to invade its neighbor, 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 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, LMT will likely stand firm even if the market dives again. 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.