The Lockheed Martin Business I’d Watch More Closely Than the F-35

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President Barack Obama had already approved 17,000 additional troops and 4,000 military trainers for Afghanistan when a new assessment arrived from Gen. Stanley McChrystal.

The situation in Afghanistan was deteriorating, and McChrystal’s broader campaign proposal required roughly 40,000 more troops.

“The costs were staggering,” he recalls in A Promised Land. “At least $1 billion for every thousand additional troops deployed.”

By Obama’s reading, the proposal could mean waiting five or six years just to bring troop levels back down to where they already stood.

And even that spending offered no guarantee of success.

Keeping Afghanistan secure required dependable Afghan forces. Those forces needed a functioning government behind them. Building that government demanded more time, more resources, and a solution to the corruption undermining the mission.

Meanwhile, every week or so, an assistant placed a folder of condolence letters on Obama’s desk. He closed the door and read the names aloud before signing.

Then he returned to the Situation Room to wrestle with whether to commit more soldiers’ lives to the war in the name of showing “resolve.”

“What does that mean exactly?” he recalls asking. “That we keep doubling down on bad decisions we’ve already made?”

Later, while talking with an aide, he recalled the nursery rhyme “There Was an Old Lady Who Swallowed a Fly.”

An old lady swallows a fly. To catch it, she swallows a spider. Then a bird to catch the spider. Then a cat, a dog, and so on.

“She ends up swallowing a horse,” Obama said.

“And she’s dead, of course,” the aide replied.

This mission, Obama wrote, had to account for “the need to make sure the country wasn’t bled dry in the process.”

That concern raises one of the most consequential questions of any military campaign: How does America secure itself at a sustainable cost?

Today, part of the answer lies in the factories, shipyards, and supply chains behind American military power.

Once an interceptor is fired, replacing it requires specialized components, materials, skilled workers, and a production line capable of delivering an accurate, reliable weapon. When those factories slow down, each engagement leaves us with fewer weapons.

And when an adversary can keep sending inexpensive drones, relying on costly interceptors can make defending against an attack much more expensive than launching it.

America needs enough proven weapons to protect its forces today, more affordable ways to defeat tomorrow’s threats, and the industrial capacity to do both.

This is why I paid special attention to the gathering at the U.S. Army War College in Carlisle, Pennsylvania…

America’s Rearmament Push Starts With the Industrial Base

On July 14 and 15, government and military officials met with defense executives, technology companies, investors, and suppliers at the Pennsylvania Defense and Innovation Summit.

The gathering connected the people buying military equipment with the people designing it, financing it, and building it. Sen. Dave McCormick’s office reported more than $10 billion in investment announcements spanning shipbuilding, munitions, AI, robotics, and other industries.

But the significance was the connection between those efforts.

When you build a promising new weapon, it needs a capable manufacturer behind it. Then, behind the manufacturer, you need reliable suppliers. Those suppliers need equipment, trained workers, and financing before they can expand.

A larger military budget only goes so far if that chain is broken.

The Pennsylvania Plan Connects Weapons, Technology, and Manufacturing

In my Rearming America research, I call this broader build-out the “Pennsylvania Plan.”

I see three connected phases: restocking the missile arsenal, preparing for warfare shaped by drones and AI, and rebuilding the industrial base… including the critical-material supply chains.

See the three phases of my Pennsylvania Plan, and the companies I’m watching in each.

For investors, that creates specific businesses to study.

Which companies can deliver the weapons customers need now? Which can make repeated attacks less expensive to defeat? And which supply the materials and components that everyone else needs to increase production?

I believe companies that solve those problems could become major beneficiaries of America’s military build-out.

But the first phase begins with an immediate need…

Commanders can’t defend their bases with promising prototypes. They need proven systems, trained crews, and replacement interceptors ready when needed.

That is why my Rearming America thesis begins with restocking the arsenal… and it’s why I’m sharing one defense stock to buy with you today.

You probably know this company. It’s behind the F-35 fighter jet, after all. But its interceptor business deserves attention, too, along with the production capacity needed to replenish those weapons.

For investors, the opportunity depends on whether this company can secure the parts, expand production, and turn demand into deliveries and cash flow.

Below, we’ll examine its production ramp, the commitments behind it, and the execution risks that will help determine how much shareholders benefit.

Lockheed Martin’s $58.6 Billion PAC-3 Production Ramp

Lockheed Martin (LMT) is familiar to most investors as the company behind the F-35, but I’m more interested in it for the interceptors and precision weapons that military planners need in greater quantities.

One particularly important product is the PAC-3 Missile Segment Enhancement interceptor, used in the Patriot air and missile defense system.

In January 2026, Lockheed announced a framework agreement targeting an increase in annual PAC-3 MSE capacity from approximately 600 to 2,000. In July, it announced a seven-year contract modification that brought the total multiyear contract value to $58.62 billion, though final contract terms remained to be settled.

By the third quarter of 2026, Lockheed reported $20.7 billion in quarterly sales, up 11% from a year earlier, and $3 billion in free cash flow. Its backlog reached $292 billion, including $52.5 billion associated with the multiyear PAC-3 MSE award.

That gives us some visibility into its future work. In its quarterly filing, Lockheed estimated that approximately 23% of its backlog would convert to revenue over the next 12 months and about 40% over the next 24 months.

Discover how Lockheed fits into the bigger Rearming America opportunity.

That extended delivery schedule is one reason I see Lockheed as a candidate for a defense supercycle portfolio. Lockheed has an established manufacturing base, products customers already use, and a growing body of work to execute. If it expands output efficiently, the resulting cash generation can support reinvestment and shareholder returns.

The challenge is execution. 

More orders can create more pressure on suppliers, labor, and working capital. Fixed-price contracts can become less profitable if costs rise faster than expected. Other large programs can also weigh on consolidated results even when missile demand remains strong.

I would judge progress by deliveries, margins, and cash conversion together. A larger backlog that becomes profitable production is what creates durable shareholder value.

LMT is the established industrial anchor in this group. Its appeal rests on the scale and duration of the work ahead, rather than an assumption that a mature defense contractor must deliver startup-like returns.

Explore the companies beyond Lockheed in my full Rearming America briefing.

The Missile Ramp Is Only the First Phase of Rearmament

Let’s go back to that nursery rhyme Obama thought of, and how every attempted solution created the need for something bigger.

Remember that, to catch the fly, the old lady required a spider. Then the spider required a bird. And the commitments kept growing into absurdity.

His concern was what came after the next decision, and whether America could sustain everything that followed.

That is the question I return to when I study today’s military build-out. Buying another interceptor meets an immediate need. Over time, America also needs more affordable ways to defeat repeated attacks, reliable sources of critical materials, and factories capable of keeping pace.

Those practical needs help explain why the Pennsylvania gathering brought together military officials, manufacturers, technology companies, and investors. Meeting America’s commitments requires work across that entire chain.

Lockheed Martin is a great place to begin looking. My full Rearming America briefing follows the opportunity further: from replenishing missile inventories to drones and autonomous systems, and the materials needed to build them.

I’ll show you how those pieces connect and which companies I’m watching as the build-out takes shape, so you can identify the businesses worth researching beyond the familiar defense names.

Obama’s story asks us to consider what the next commitment will require. And that same question can help investors see where demand may go next.

Watch my Rearming America briefing to see the companies positioned to help meet that demand… and build your watchlist for what comes next.