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Why Lockheed Martin, Clayton Williams Energy, and Valero Energy Jumped Today

By Dan Caplinger – Oct 25, 2016 at 5:06PM

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Even on a down day for the stock market, these stocks climbed. Find out why.

The stock market gave up ground on Tuesday as investors became more concerned about the sustainability of the U.S. economic expansion. A reading on consumer confidence showed weakness as some expressed worries about the job market and their ability to keep bringing in income, and that was enough to make some investors question whether the expected boost in short-term interest rates from the Federal Open Market Committee later this year would prove ill-timed. Yet even though major market benchmarks fell between a third of a percent and a half percent, some stocks managed to produce significant gains. Among the best performers were Lockheed Martin (LMT -1.23%), Clayton Williams Energy (NYSE: CWEI), and Valero Energy (VLO -0.32%).

Lockheed Martin has a substantial space business. Image source: Lockheed Martin.

Lockheed scores a strong third-quarter performance

Lockheed Martin climbed 7%, leading the S&P 500 after reporting its third-quarter financial results. The defense contractor said its sales from continuing operations jumped about 15% to $11.6 billion, producing earnings of $1.1 billion, or $3.61 per share. Lockheed also offered solid guidance for the coming year, including expected sales increases of 7% in 2017, and the contractor believes deferred replacement of equipment among its customers could result in additional growth in the years to come. The company also said it would boost its dividend by 10%, now paying $1.82 per share on a quarterly basis and further cementing its shareholder-friendly policies. Despite the ever-present uncertainties related to geopolitics that come with every defense contractor, Lockheed convinced investors today that it's in a good position to benefit from whatever comes next on the global stage.

Clayton Williams makes a sale

Clayton Williams Energy soared 26% in the wake of its announcement that it would sell off some of its key assets to raise cash. The energy producer said it would divest assets in the Giddings Area of East Central Texas, fetching $400 million from an unnamed third party. Clayton Williams Energy expects to use the proceeds from the sale for a couple of purposes, including the potential to fund further development in the Delaware Basin region of West Texas and Southern New Mexico, as well as paying down some of its indebtedness. Given the fact that many energy producers are looking to make strategic asset sales, Clayton Williams Energy's success in doing so heartened investors who applauded the move to focus in on the company's most promising areas.

Valero climbs despite weaker earnings

Finally, Valero gained 5%. The energy refining and marketing company released its third-quarter earnings report, and although the company saw its profits cut by more than half, investors were generally pleased with what they saw from Valero. Falling margins were responsible for the contraction in Valero's net income, with shrinking differences in prices between refined products like gasoline and diesel fuel and raw crude oil. Nevertheless, the market for refined products is likely to remain fairly tight for the near future, and investors see signs that Valero could benefit from wider spreads if conditions improve during the remainder of the year and going into 2017.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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