YB new stock pitches (Mon, Jul 27)

Lockheed Martin (LMT) reported Q2 revenue of $20.06 billion versus $18.16 billion a year ago, a headline 11% growth that adjusts to 7% underlying once you strip the prior year's $1.6 billion of reach-forward program losses and $169 million of other charges (per CFO Evan Scott), with EPS jumping to $7.94 from $1.46; the stock closed up 10.54%. The core story is a record backlog of $230.4 billion on $65 billion of single-quarter orders, set against a 'wartime economy' narrative, driven mostly by Missiles and Fire Control, where backlog nearly doubled from $46.7 billion to $87.9 billion on a seven-year, $35 billion THAAD interceptor contract. Guidance was raised across the board—sales to $79.75–$81.75 billion, EPS to $29.95–$30.65, and free cash flow to $7.0–$7.2 billion. On capital return, Lockheed bought back zero stock in the first six months of this year versus $1.25 billion in the same period of 2025 and kept dividends flat, directing cash into factories, missiles, and acquisitions; CEO Jim Taiclet said the company is 'investing in the manufacturing and design capabilities, before the orders come in,' citing government requests to triple PAC-3 MSE output, quadruple THAAD, and ramp PrSM faster than ever planned.

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Siemens Energy (ENR.DE) is a long thesis that could double in two years with amazingly protected downside given the nature of the business and its order book, presented alongside GE Vernova (GEV) to debunk the widely misunderstood 'peak gigawatt orders' bear case. Bears (e.g., Max Yates at Morgan Stanley, Vlad at Barclays) argue that firm commitment GW will peak in 2026 (GEV on track for at least 125GW total backlog and at least 60GW firm commitments this year, securing capacity through 2031) and then decline toward the ~30GW out-year production capacity, marking a peak in orders, earnings, and the stocks; while the logic on finite booking capacity is mathematically sound, the conclusion that this equals peak EBITDA is flawed because what actually drives value is long-term EBITDA, EBITDA growth, and durability. Even if commitment GW falls to 40GW/year from 2027-2030, GEV's backlog grows from 125GW to 182GW, booking it out through 2036, and even if bookings collapse to 20GW/year, the order book supports maxed-out 30GW/year deliveries through roughly 2048—the huge backlog 'bathtub' slowly drains and secures max deliveries for multiple decades. Critically, the next leg is services: each gas turbine sells with a 20-year service agreement (kicking in ~3 years post-delivery) at 40-50% incremental margins, with lifetime service revenue worth 2-3x the initial equipment sale per GEV CEO Scott Strazik; prior to 2026 equipment was a loss leader while services generated over 100% of profits. This creates a compounding layer cake—equipment growth 2026-2030, services growth after 2030, and continued margin expansion—akin to aerospace or bioprocessing, warranting a high multiple, with the company also capturing roughly $7B of EBITDA per year from equipment sales; thus EBITDA never peaks regardless of whether GW sustains at 60GW or normalizes to 40GW. The author prefers ENR over GEV (using GEV only because it just reported) and notes ENR's Grid business is even larger, faster-growing, and higher-margin, offering greater upside not captured here; other bear cases like behind-the-meter (BTM) power are dismissed as stupid, since BTM should command much lower out-year multiples given lower reliability, higher costs, and higher emissions.

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Smart Shooter (TASE: SMSH), an Israeli defense-tech company that IPO'd in March 2026 with no sell-side coverage, makes SMASH electro-optical fire-control sights that clamp onto any rifle and use computer vision to hold the trigger until a hit is calculated, raising moving-target hit rates from ~20% to ~80% and turning conscripts into marksmen, addressing both the drone threat (kinetic solutions work where jamming fails against fiber-optic drones) and poor infantry marksmanship; combat-proven in Gaza and fielded across 25+ countries including the US Army/Marine Corps/Air Force/Navy, IDF, UK, and Germany, with two product lines (soldier-carried SMASH systems and ~15kg remote Hopper weapon stations). At ₪25.45 (July 22 close), market cap is ~₪1.31B (~$430M) and EV ~$355M after ~$75M net cash, trading at over 50x EV/EBITDA and ~55x 2026 earnings—not cheap on trailing metrics. FY2025 delivered $36.8M revenue (+50%), $6.1M operating profit, $6.04M net profit, 18% EBITDA margin, 16% net margin, with 96 employees (~$380K revenue/head), zero debt, and improved diversification (Israel MoD fell from 47% to 22%; US 22%, Europe 24%, APAC 13%); the business is violently back-end loaded, so the leading indicator is orders/backlog, which nearly doubled from $25M (end-2025) to ~$49M shortly after Q1 2026, with Q1 new binding contracts of $17.65M (+396%), 2026 new contracts reaching ~$33M by late May versus $39M for all of 2025, and guidance for at least $40M of backlog converting in 2026. The moat rests on a decade of patented battlefield data/algorithms, certification and integration lock-in, category creation, and repeat follow-on orders (recent wins: $10.7M US Army, ₪6.7M Israeli MoD Hopper, $1.8M US Navy, $3.4M USMC), while weaknesses include a single product family, government-dependent politically revocable lumpy orders, TASE-only thin liquidity, and competition from deeper-pocketed primes. Founder-led by CEO/chair Michal Mor and CTO Avshalom Ehrlich (both since 2011), risks include founder IPO stock sales (~₪18M each), thin board independence, a concentrated register (Canadian partnership ~23%, Phoenix ~21%, Chilean investor ~10%, ~29% float), key-person risk, and margin disappointment—the thesis's fragility—alongside order lumpiness, export/political risk, potential peace compressing multiples, and technological obsolescence (directed energy or cheap interceptors). Applying a fair PE of 26 (balancing 40-50% growth, IP-like economics, net cash, and structural demand against product concentration, lumpiness, and competition) to 2028 estimates yields a fair value near $19.80 versus ~$8.30 today, implying ~43% annualized return, but this hinges on achieving a 30% net margin in 2028 (25% gives ~30%, 20% gives ~18%, and 20% margin with only $100M revenue makes almost nothing)—so the real bet is operating leverage risk, not growth risk. Catalysts include drone defense becoming a permanent budget line, the hit-rate becoming a procurement standard (transitioning from special forces to general-purpose force), a potential (speculative) New York dual listing that would transform the register, and operating leverage arriving; next catalyst is Q2 2026 results (late August), watching backlog. This is a speculative position, sized accordingly.

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