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Lockheed GOES Up

By Rich Smith - Updated Apr 5, 2017 at 8:06PM

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Straight up, with a pair of weather satellites.

What's that, up in the sky? Is it a MULE? Is it an F-35? Is it ... Superman with laser-beam eyes?

No, folks, this time Lockheed Martin (NYSE:LMT) is putting something much less sexy than any of those three up in the sky. But that doesn't mean it's not worth mentioning. The aerospace juggernaut announced yesterday that it has won potentially $1.1 billion in contracts to build weather satellites for the National Oceanic and Atmospheric Administration.

Is there money in weather satellites?
Indeed there is. The contract in question hires Lockheed to act as general contractor in building two to four of the nation's next-generation GOES-R (short for Geostationary Operational Environmental Satellite) -- at a cost of about $270 million a pop. Of course, Lockheed doesn't get to keep all the loot. Its team of partners already numbers in excess of a dozen public and private enterprises, including such big names as IBM (NYSE:IBM), SAIC (NYSE:SAI), and Honeywell (NYSE:HON).

More important than the revenue, though, is the pride of place that Lockheed wins along with the contract. At least two big rivals bid against Lockheed: Northrop Grumman (NYSE:NOC) and Boeing (NYSE:BA). In winning, Lockheed unseated the last GOES-round winner, Boeing (something that's happened with disturbing frequency of late), as the presumptive winner of this round of GOES contracts. And in the neverending game of defense contracting tic-tac-toe, Lockheed also blocked Northrop's bid to grab a bigger piece of the space-contracting biz.

Just as important -- every win Lockheed notches in the civilian space sector insulates it further from investor fears that an Obama administration might cut spending on defense. Democrats may or may not turn out to be dovish on fighter jets and flying lasers. One thing I'm sure they won't cut spending on, though: satellites designed to monitor global warming and predict catastrophic hurricanes.

Foolish takeaway
In government contracting as in space, momentum is everything. Every big contract win helps the winner amass expertise essential to winning the next big contract. Right now, Lockheed's got big mo' as a key player in the space race. And it's moving in the right direction.

Do you see space investing as the future of investing? Read more:

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Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool is positively militant about disclosure.

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Stocks Mentioned

Lockheed Martin Corporation Stock Quote
Lockheed Martin Corporation
LMT
$438.01 (0.87%) $3.77
International Business Machines Corporation Stock Quote
International Business Machines Corporation
IBM
$134.93 (0.69%) $0.92
The Boeing Company Stock Quote
The Boeing Company
BA
$170.47 (0.28%) $0.48
Honeywell International Inc. Stock Quote
Honeywell International Inc.
HON
$202.25 (0.69%) $1.38
Northrop Grumman Corporation Stock Quote
Northrop Grumman Corporation
NOC
$486.87 (1.52%) $7.29

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