Lockheed Martin Corporation (NYSE: LMT) stocks influenced by Middle East
Lockheed Martin Company is an American weapons manufacturer, selling weapons to the armed forces of several countries. They sell a wide range of weaponry, from their new cutting edge stealth fighter, the F-22 Raptor, to the older and widely used F16 fighter jet. Some traders avoid Lockheed Martin shares over ethical concernsbecause they have supplied weapons to some governments with a history of human rights violations. For example, Saudi Arabia recently purchased 10 Sikorsky MH-60 R anti-submarine helicopters from Sikorsky Aircraft (which is owned by Lockheed Martin.)
Lockheed Martin traders sometimes profit from conflicts
While some investors may avoid trading their stocks for ethical reasons, other investors are able to trade their stocks profitably, often by speculating on the outcome of events in the middle east. The Middle East has always been a volatile region. In addition, many countries there (especially in the Gulf) receive billions of dollars for the sale of their crude oil. It is therefore not surprising that some countries in the Middle East are potential customers of the military equipment of Lockheed Martin (and other defense companies, such as BAE Systems).
It should also be noted that the US (and other) armed forces have often intervened (militarily) in the region, more recently, carrying out airstrikes against the Islamic State group, both in Syria and Iraq. Military intervention can lead to increased demand for weapons by intervening countries. The increase in demand may only be for ammunition and general supplies. If the intervening countries lose a lot of military materiel in combat, they may need replacements to maintain their combat capabilities for future wars.
Heightened tensions between Shia Iran and Sunnis Saudi Arabia are another prime example of how the Middle East could potentially influence a defense company’s stock price (by affecting demand.) Saudi Arabia can buy more arms if it anticipates war, and they may need to be restocked during war. Iran is a relatively competent arms producer, so it may not look to foreign companies for armaments. International sanctions imposed on Iran would also prevent a deal from materializing.
The points above explain how investors can trade Lockheed Martin shares based on events in the Middle East. For example, if Saudi Arabia and Iran went to war, Lockheed Martin’s share price could rise over time, due to increased demand for their products, resulting in increased income and benefits. This will likely result in a higher dividend payout (This is the main reason long-term investors would buy their stocks.) The higher speculated dividend payout causes an increase in demand for their stocks, causing the market to rise in the value of their actions.
There are many other factors that will inevitably affect Lockheed Martin’s financial performance and, therefore, their share price. The cost of raw materials (which they use in making their products) will be another key factor that will influence their performance and, therefore, their stock price.