Trump's 'Carrot And Stick' Defense Push: Which Stock Is Best Priced For $1.5 Trillion Budget?

Group 1: Core Insights - The focus for investors is on which defense stock is best priced amid potential increases in defense spending, particularly with a proposed $1.5 trillion defense budget [1] Group 2: Lockheed Martin - Lockheed Martin has a market cap of approximately $115 billion, with a trailing P/E ratio near 28, but a forward P/E ratio dropping to around 17, indicating expected earnings growth [2] - The EV/EBITDA ratio of about 17.4 positions Lockheed as a "steady compounder," suggesting it is priced for reliable delivery if production increases as planned [3] Group 3: RTX Corp - RTX Corp is the most expensive stock among the group, with a market cap near $249 billion, a trailing P/E above 38, and a forward P/E close to 28, reflecting high expectations [4] - Its EV/EBITDA of about 19 indicates confidence in scale and diversification, but the lower earnings yield suggests investors are paying a premium, leaving less room for surprises if defense spending increases [4] Group 4: Northrop Grumman - Northrop Grumman is noted for being the cheapest among the three, with a trailing P/E near 21, a forward P/E just under 20, and an EV/EBITDA below 14, which is the lowest in the group [5] - It has the highest earnings yield, making it appear as the most defensively priced option for capitalizing on increased defense spending, particularly related to long-cycle and classified programs [5] Group 5: Summary of Investment Outlook - If the proposed $1.5 trillion defense budget is realized, RTX is viewed as the premium investment, Lockheed as the execution-focused trade, and Northrop as the value-oriented choice, where expectations are less likely to be negatively impacted by headlines [6]