"Lockheed Martin is a buy. Now, a lot of people were disappointed by the last quarter, I say get a life. This is a company generating a gigantic amount of cash. It's not expensive. It's very well run. And as far as I'm concerned, this is the best bargain in the defense group. LMT, Lockheed Martin, pull the trigger right now." — CNBC's Mad Money 10/12/2009

Since that time, Lockheed reported quarterly earnings that were 13% better than consensus estimates and they raised the quarterly dividend by 10.5% to $.63 cents per share starting in December.  However, the company forecasted fiscal 2010 earnings per share slightly below where analysts' estimates had pegged them and the stock sold off in reaction.  At Ockham, we have a longer term investment focus and believe that the market overreacted to the conservative forecasts.  From our standpoint Lockheed actually performed reasonably well in the previous quarter and raising the dividend is a signal of confidence from management.  The implied dividend yield of the next four quarters comes out to about 3.5%. 

We are not blind to the challenges LMT faces with pension liabilities and the possibility of reduced defense spending ahead, but by our methodology the stock is too cheap trading at less than ten times the lowered 2010 earnings guidance (as well as 2010 analysts' estimates).  The fundamentals strengths of cash earnings and revenue growth have continued to improve recently as well.

Apparently in light of recent developments, Cramer has shifted his perspective on Lockheed as of Monday night's show.  Although Lockheed beat estimates, Cramer referred to it as a bad quarter and said that Lockheed is suffering from a priority shift at the Pentagon.  According to Cramer, Lockheed is saddled with programs that the Pentagon no longer wants, while Northrop Grumman (NOC) has the sort of capabilities that fit the goals that the military is looking to achieve in Iraq and Afghanistan.