Rocket Dreams & Fool’s Gold

by

Well now, it seems the gentlemen in Washington have decided the heavens ain’t high enough for their ambitions. Old Trump, bless his heart, signed an order – a proclamation, really – declaring we must be not just in the space business, but the biggest customer of it. Return to the Moon by ’28, a permanent settlement with enough electricity to power a small city by ’30… sounds like a scheme cooked up during a particularly long poker game, if you ask me. They’re talkin’ ’bout Artemis and lunar power, but I reckon it’s mostly about makin’ sure somebody gets rich. And wouldn’t you know, there’s a couple of companies just waitin’ to oblige.

The idea, as I understand it, is to hand the government’s checkbook over to these private ventures and let ’em handle the heavy liftin’. Instead of ownin’ satellites, they’ll just pay for the data. Instead of buildin’ reactors, they’ll pay for the power. It’s a right clever scheme, really. Predictable income for the companies, and a whole lot of paperwork for the taxpayers. They call it innovation; I call it a shift in where the money disappears to. But hey, who am I to judge? I’ve seen enough schemes to fill a library.

Now, two names keep comin’ up in these conversations: Lockheed Martin (LMT +5.89%) and Leidos Holdings (LDOS 0.24%). They’re already deep in the space game, and with this new order, they’re likely to be swimmin’ in dough. It’s like givin’ a blacksmith the contract to build all the horseshoes in the kingdom. He’s gonna do alright, you can bet on that.

Lockheed Martin: Already Amongst the Stars (and Profits)

Lockheed Martin, out of Bethesda, Maryland, is a company that builds things that go boom, and things that go… well, up. They design and build everything from lunar landers to satellites, and everything in between. A right impressive operation, if you like that sort of thing. They’re the sort of folks who can turn a dream of reachin’ for the stars into a bill for the taxpayers.

Loading widget...

They’ve seen their stock climb somethin’ fierce in the past year – over 18%, if you’re keepin’ score. Third quarter revenue was $18.6 billion, a respectable sum, and their earnings per share rose a bit too. Their space business is doin’ particularly well, with revenue up and profits jumpin’ even higher. They’ve got a backlog of orders stretchin’ out to the horizon, includin’ a hefty $38.4 billion just for space projects. That’s a lot of promises to keep, and a lot of money to collect.

They’re also returnin’ money to shareholders, increasin’ their share repurchase program and boostin’ their dividend. They’ve been raisin’ that dividend for 23 years straight, which is a testament to their ability to extract wealth, even when the rest of the world is turnin’ upside down. It’s a fine record, I’ll grant ’em that, though I suspect it has more to do with government contracts than with genius management.

Leidos: A Jack-of-All-Trades (and a Master of Contracts)

Leidos, out of Reston, Virginia, is a different beast altogether. They’re a one-stop shop for the government, providin’ everything from engineering to biomedical research. They’ve been workin’ with NASA for over 20 years, and they’ve just landed a $760 million subcontract for the Artemis missions. They’re buildin’ the systems that make sure the astronauts can breathe, which, if you think about it, is a pretty important job.

Loading widget...

Their stock has been climbin’ too, up over 29% in the past year. Third-quarter revenue hit a record $4.5 billion, and their earnings per share rose as well. They’re also payin’ a dividend, though it’s a bit smaller than Lockheed Martin’s. They’re expandin’ into new areas too, buyin’ up a company that provides engineering services for utilities. It’s a smart move, diversifyin’ their portfolio and spreadin’ the risk.

Of the two, Leidos seems to be makin’ a better effort to branch out beyond government contracts. They’re also tradin’ at a lower valuation, which makes them a bit of a bargain. Lockheed Martin is a solid company, no doubt, but their stock is already priced for perfection. For income-oriented investors, Lockheed Martin’s higher dividend might be the better choice. But for my money, Leidos is the one to watch.

Both these companies are likely to do well in the long run. But remember, the only guarantee in this world is that somebody will always try to sell you a dream. And in the case of space travel, that dream is likely to come with a hefty price tag.

Read More

2026-01-29 19:52