Could This Be the Next Stock the U.S. Government Takes a Stake In?

Key Points

• The U.S. government has been discussing whether to invest in defense stocks.

• One defense company that does a lot of business with the government is Lockheed Martin.

• An uptick in government spending could bolster Lockheed Martin's sluggish growth.

• 10 stocks we like better than Lockheed Martin ›

Last month, computer company Intel announced that the U.S. government was going to be taking a 10% stake in its business. The money would come from grants that it previously issued to the business (but not yet paid), including under the CHIPS and Science Act.

It didn't appear to be a one-off move, either, as the White House also hinted that it may not be the last deal that it does. There could be other companies that it takes a stake in. Having the backing of a big investor such as the U.S. government can add stability for a business and could result in more growth opportunities, but it may also introduce some added oversight and scrutiny along the way.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

One company that could be the next target for the U.S. government is Lockheed Martin (NYSE: LMT).

Image source: Getty Images.

Why the U.S. government might invest in Lockheed Martin

Lockheed Martin is a large defense company, known for making aircraft such as the F-35 fighter jet. It plays an important role in the country's defense strategy, and it generates a lot of revenue from the government. Of the $18.2 billion in revenue it generated last quarter (which ended on June 29), $13.1 billion, or 73%, was from the U.S. government.

Given its close relationship with the U.S. government, Lockheed Martin could be the next company that the government takes a stake in. Commerce Secretary Howard Lutnick admitted in an interview last month that there has been "a monstrous discussion about defense" and even referred to Lockheed Martin as "basically an arm of the U.S. government."

Nothing has been announced at this stage, but it appears clear that Lockheed Martin is a company that the U.S. government is considering investing in, among other defense stocks.

Is Lockheed Martin due for more growth?

Lockheed Martin has a solid business that is profitable, but its growth rate hasn't been all that impressive in recent years. Its sales last quarter were flat, and historically, this has been a slow-growing business.

LMT Revenue (Quarterly YoY Growth) data by YCharts

What is notable, however, is that during President Trump's first term in office, which began back in 2017, Lockheed Martin did see an acceleration of its growth rate. Republican administrations are known for investing heavily into defense, and that trend could continue under Trump's second term. If that happens, Lockheed Martin could become a more attractive stock to own.

Between 2017 and 2021 (which coincides roughly with Trump's first term), shares of Lockheed Martin rose by 42%.

Is Lockheed Martin stock an underrated buy right now?

Shares of Lockheed Martin are down around 3% this year, and over the past 12 months, they have declined by 17%. But it's trading at a forward price-to-earnings multiple of only 16 (based on analyst projections); it's a cheap stock to own, given that the S&P 500 trades at more than 21 times its estimated profits. It could be overdue for a rally. It also offers an above-average yield of 2.8%, which can give investors some extra incentive to buy and hold the stock.

Whether the government invests in Lockheed Martin or not shouldn't be the determining factor in assessing whether it's a good investment or not. Government policies can change from one administration to the next. What matters most are fundamentals. And with solid earnings numbers and consistent profitability, Lockheed Martin is an attractive stock to invest in for the long haul, especially when factoring in the potential to collect a lot of dividend income from it. It may not be a high-powered growth stock, but Lockheed Martin can be a dependable investment to hang on to for the long haul.

Should you invest $1,000 in Lockheed Martin right now?

Before you buy stock in Lockheed Martin, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lockheed Martin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $661,694!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,082,963!*

Now, it’s worth noting Stock Advisor’s total average return is 1,067% — a market-crushing outperformance compared to 190% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 15, 2025

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel. The Motley Fool recommends Lockheed Martin and recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.