Where Will Lockheed Martin Stock Be in 5 Years?

No one has a crystal ball, so pinpointing exactly where any stock will be in a week, a month, a year, or five years is impossible. On the other hand, investors crave clarity, and saying a stock is going to be higher or lower over a given time frame is stating the obvious. It doesn't do much to reduce ambiguity.

With those disclaimers out of the way, market participants aren't going out on a limb when expecting Lockheed Martin (NYSE: LMT) to potentially trade noticeably higher in five years than where it resides as of March 31, which is around $600. That's down from a February flirtation with $700, or $692 to be precise, and that pullback may spell opportunity when it comes to getting involved with Lockheed Martin stock.

The dip is one reason to consider this defense stock now. Still, for investors looking to the F-16 manufacturer as a long-term portfolio centerpiece, there's a sturdy fundamental outlook supporting that view.

Precision is difficult to come by, but Lockheed Martin stock is likely to be higher in five years. Image source: Getty Images.

Lockheed will fly higher in five years

Remember that past performance isn't a guarantee of future returns, but Lockheed Martin basically kept pace with the S&P 500 over the past half-decade. That's not exactly a resounding endorsement, given that investors can defray risk by owning an index fund rather than individual stocks. But the ingredients are in place to make this one of the best large-cap industrial stocks over the next five years.

First, there's the global defense spending catalyst. Last year, defense spending worldwide swelled to $2.63 trillion from $2.48 trillion in 2024. Of course, the U.S., China, and Russia are the "big kahunas" in global defense spending, but what's noteworthy for investors considering defense stocks such as Lockheed Martin is that other countries are joining the party. For example, the 2025 increase in defense expenditures was driven by upticks in Europe and the Middle East.

In fact, defense spending in Europe continues breaking records. That's relevant to assessing where Lockheed shares may be in five years, because the company counts an array of European nations, including Germany, Greece, Poland, and Spain, among its clients.

Lockheed has other potential tailwinds that could ensure this stock takes flight over the next five years, including strong free cash flow-generating capabilities. The defense contractor generated $6.9 billion in free cash flow last year and forecast $6.5 billion to $6.8 billion for 2026. Free cash flow paints an accurate picture of companies' financial health, and it's the healthy ones that often deliver superior long-term returns.

Lockheed is a good steward of cash

In investing, there are no free lunches or guarantees, but investors can tilt the odds of success in their favor by embracing free cash flow powerhouses, with one caveat: The company must be a good steward of cash. It's one thing to generate cash flow, but if it's squandered on ill-fated acquisitions or product launches that don't bear fruit, investors don't reap the rewards. Lockheed Martin shareholders need not worry about that issue.

The proof is in the pudding. Not only does this defense behemoth prioritize research and development to keep its competitive spear sharp, but it also returned $6.1 billion to investors last year through buybacks and dividends, confirming it is a shareholder-friendly company.

Todd Shriber has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.