Imagine if fighter jets could shoot down enemy targets with high-powered lasers.
That is now closer to reality. Recently, the Air Force Research Laboratory awarded a $26 million contract to Lockheed Martin (LMT) for a laser system small enough to mount on future fighter jets.
It’s cool tech … and a potential goldmine for investors in stocks tied to lasers.
Lockheed, and other defense contractors, have been working on powerful lasers for a long time. In June, the U.S. Army test-fired a laser weapon from an Apache helicopter.
In other recent military tests, Lockheed used a laser to melt a pickup truck enginefrom a mile way. And a laser successfully shot down four drones at the White Sands Missile Range in New Mexico.
The technology works, and it is instantaneous.
The Laser Advancement for Next-generation Compact Environments project will build on that technology. LANCE pushes the boundaries of what engineers thought was possible.
It’s one thing to mount a laser on a ground vehicle, a ship or even a helicopter, which can hover for stability. But it’s a real challenge to attach a 60-KW-class laser to a $160 million tactical jet carrying 18,500 pounds of jet fuel.
The laser weapon generates a beam of light so intense that Lockheed compares it to a stream of unlimited bullets moving at the speed of light.
This stream is almost invisible to the human eye. But don’t underestimate it. It can destroy small rockets, missiles, drones and other targets that are more than a mile away.
The system uses fiber-optic lasers and sophisticated beam control. As power levels increase, Lockheed claims the lasers will eventually knock out bigger targets at longer ranges.
That is the opportunity for investors.
A New Era of Invention
Most portfolios should have some exposure to defense contractors. These companies are very often at the cutting edge of technologies. Having a client with ultra-deep pockets helps. It defrays costs. And it’s good for shareholders, too.
However, laser development, for this application, is next-level research. It’s the kind of thing that will not happen without the contribution of smaller, nimbler laser technology firms.
A decade ago, it was the kind of thing that seemed impossible. But this is a new era of invention. The exponential growth of information technology is bringing elusive scientific breakthroughs into the realm of possibility. Laser development is no exception.
There are several ways for investors to get involved …
One company has been supplying engineered materials and opto-electronic components since the 1970s. While it’s not a household name, the defense sector actively seeks out its systems for laser designation, missile warning, targeting and navigation. Its five-year sales growth is in the middle teens, and guidance is upbeat. It has been a spectacular winner for investors.
Another company makes laser diodes and measurement equipment. It also holds the distinction of being the largest commercial laser company in the world. Its machines are the gold standard in robotic welders. However, its position in markers, cutters and intellectual property make it indispensable for the next generation of laser development. After surging 400% since 2016, the stock is consolidating, getting ready for the next leg higher.
Another company is a pure instruments play. It provides solutions that monitor and analyze critical parts of the manufacturing process. Founded in the 1960s, the company has key competencies in optics, photonics and lasers. It has also won many key contracts during the last two years. While the stock has tripled during that time, the outlook remains very strong.
These are the types of opportunities I share with my Pivotal Point Trader subscribers. They own a big defense name that’s up almost 20% as of this writing. And we have a laser-like focus on several other best-in-class names that are throwing off nice gains today while they work on the products and services of tomorrow. Click here to learn more.
The world is a very dangerous place. Small rockets, and even unmanned drones, are now cheap enough for our enemies to procure and deploy. Lasers mounted on fighter jets would neutralize those weapons.
Happily, there is also a way for investors to benefit besides the benefit of repelling enemy attacks.
Best wishes,
Jon Markman
Jeff Saut, Chief Investment Strategist at Raymond James: So I am sittin’ on a dock of the bay here in Boca Raton Florida watchin’ the tide roll away as I wait to speak at a conference of insurance CEOs and CFOs. I have spoken at this annual event for the past 10 years, and it is always a “gas” because the attendees are terrific people. I love Boca Raton, although the traffic is absurd as it took me two hours to drive to Fort Lauderdale yesterday to visit with friends at Franklin Templeton (I really miss Sir John), and Rajiv Jain, portfolio manager of the Goldman Sachs GQG Partners International Opportunities Fund (GSIMX/$12.81), which I own (Rajiv). I first met Rajiv about a year ago when he became an outside manager for Goldman Sachs after managing $40 billion for a bank in Geneva. I know a lot of portfolio managers, but this guy is arguably the smartest guy in the room…
A portion of today’s note from legend Art Cashin: The Narrow Rally Syndrome Continues – In his latest report, Jason Goepfert of SentimenTrader made a couple of observations on the relative narrowness of the record setting rally:
Are stock ownership figures nearing bubble territory?
Latest polling data provides some insight into the bull’s sustainability.
Are annual charts leaning bullish or bearish?
Once a year, Gallup conducts a poll that provides some insight into the sustainability of the bull market in stocks (SPY). The concept of an investment bubble implies irrational investor confidence. If skepticism and fear were near all-time, bubble-like lows, we would expect a very high percentage of U.S. households to be in the stock market (VTI), as was the case near the euphoric 2007 stock market peak (see graph below).
I am staying patient on this not only because the daily charts have not completely given up the rising yields play, but also because the monthly charts still look poised for it (and a decline in bonds).
The post-FOMC period has been somewhat annoying as often seems to be the case. I’ve been trying my best to be balanced until the view clears as the robots running this market grind their gears. It’s one of those phases I wish I were a day trader not at all caring what the macro signals are. But alas…
Here we have the T note having inched out of a bear flag and the yield having inched up from a bull flag. These are being tested now.
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