During the lightning round of the August 6 episode of Mad Money, a caller inquired about the long-term outlook for Lockheed Martin Corporation (NYSE:LMT), highlighting its prominent position as a major defense contractor and pointing out its steady dividend payout of $3.45 per share. Host Jim Cramer responded with strong enthusiasm:
I think it’s sensational. I think it’s sensational. I think the CEO is fantastic. I think you buy Lockheed Martin, you do just fine. I really think it’s a good one.
Strong Financial Performance and Backlog Expansion
Lockheed Martin Corporation’s (NYSE:LMT) recent Q2 earnings report backs up Cramer’s confidence with solid numbers. The company posted a GAAP EPS of $7.94, topping expectations by $0.74, while revenue reached $20.06 billion, a 10.5% increase compared to the same period last year. Backlog also climbed to a record $230 billion, mainly due to major awards like the multi-year contract for THAAD interceptors, along with a full-year net sales consensus projected around $79.13 billion. For investors looking at how market valuations compare across top defense names, a close look at our previous report, RTX (RTX) vs. Lockheed Martin (LMT): How Street Is Pricing Two Defense Giants, provides a helpful baseline.
Phased Accumulation Strategy for Lockheed Martin
When building a position in equities experiencing choppy trading conditions, Cramer frequently advocates for measured scaling rather than deploying capital all at once. Showing this disciplined approach, he outlined a similar framework on June 5 discussing Lockheed Martin Corporation’s (NYSE:LMT) price movement on June 5. He advised an investor on how to scale into the stock safely:
You know… First of all, you sound like a smart fella. I think that you buy. Here’s what I’d like you to do: Let’s say you want to buy five shares. Why don’t you buy two now and then if it gets below $500, buy the other three. I don’t want you to come in all at once. This stock’s been very volatile…. Here, it’s at $523. I want you to buy some, and then below $500, you’ll buy the rest. And that’s what I’m trying to do with my Charitable Trust, buy slowly.
Headwinds to Consider
Despite the record backlog and rising institutional interest, cautious analysts point out several structural headwinds facing Lockheed Martin Corporation (NYSE:LMT). Margin compression remains a recurring concern, as rising research-and-development costs, supply chain friction, and fixed-price contract execution pressures can weigh heavily on profitability. Moreover, any unexpected government budget delays, political gridlock over defense spending bills, or delays in complex next-generation development programs could slow down conversion rates from the company’s massive order backlog into actual free cash flow.
Institutional Footprint and Valuation
Insider Monkey’s data shows that hedge fund interest in the stock has notably accelerated. Hedge fund sentiment climbed significantly, with the number of tracked hedge funds holding positions in Lockheed Martin Corporation (NYSE:LMT) jumping to 83 in the first quarter of 2026, up significantly from 59 in the previous quarter. Trading at a forward P/E ratio of 19.34 along with a low short interest of float at just 1.62%, the stock shows strong institutional support and limited bearish speculation.
Overall, LMT’s record backlog, improving earnings outlook, and rising hedge fund interest support Cramer’s bullish view. However, margin pressure and defense budget risks remain key areas to watch.
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