2 Good growth stocks to buy now and hold for the long term

Lockheed Martin (NYSE: LMT ) and BlackSky Technology (NYSE: BKSY ) Slam Dunk Defense stocks are worth buying now and holding for the long term.

President Donald Trump proposed a $1.7 trillion defense budget for the federal government in fiscal year 2027, and that was in January, before he escalated the conflict with Iran. Even if any defense budget ultimately passed by Congress falls short of this demand, the current geopolitical situation lends credence to reports such as the recent bipartisan Center for a New American Security report that concluded the US military needs to improve its ability to counter drone strikes.

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Here are three reasons to buy and hold each of these stocks.

Lockheed Martin ended 2025 with a record backlog of $194 billion, about two and a half times annual sales, so the company’s revenue growth for the next few years is already in the works.

The US defense and aerospace company had sales of $75 billion in 2025, an increase of 6%. Its earnings per share (EPS) fell 3.6% to $21.49, a decline that management credited to a higher tax rate, pension-related costs, and higher interest expenses. Lockheed forecasts 2026 revenue of $77.05 billion to $80 billion, which would be a 4.7% increase at the midpoint, and EPS of $29.35 to $30.25, which would be a 37% increase at the midpoint.

Lockheed has delivered 191 F-35 fighter jets and 120 PAC-3 MSC interceptors by 2025, record numbers for a defense contractor. It has invested heavily in artificial intelligence (AI) solutions, and some of that investment is already paying off, with over-the-air updates for its GPS III and Tranche 1 transport layer satellites.

During the U.S. operation Absolute Resolve in Venezuela in January, the company’s F-35 and F-22 fighter jets were used, as well as its RQ-170 Sentinel stealth drone and Sikorsky Black Hawk helicopter.

Lockheed’s product, perhaps the most in demand, is the Patriot Interceptor missile, which is used to eliminate incoming threats. The company is increasing production capacity of these missiles from 600 to 2,000 per year, and announced a plan to quadruple the number of Terminal High Altitude Area Defense (THAAD) interceptors to 400 per year.

Lockheed raised its quarterly dividend by 4.5% to $3.45 a share in 2025, giving it a yield of about 2.5% at the current share price.

That yield has fallen slightly since the stock is up more than 36% so far this year. The company has increased its dividend by 684% for 24 consecutive years, so if it raises it again this year, it will join the Dividend Aristocrats®, the group’s preferred group. S&P 500 Companies that have increased payouts for 25 or more consecutive years. (The term Dividend Aristocrats® is a registered trademark of Standard & Poor’s Financial Services LLC.)

BlackSky’s technology, through low Earth orbit satellites and the Spectra software platform, provides high-frequency, high-resolution imagery and automated AI-powered analysis for defense and other purposes. It grew by 32% to 345 million dollars in 2025. The stock is up more than 29% so far in 2026.

The small-cap company can provide real-time satellite imagery, unlike traditional satellite systems, which may have significant lag time before they are in position to photograph the desired location. The BlackSky system captures up to 15 images per day of each target location, which can be especially useful when monitoring moving targets, such as aircraft, ships, or forest fires.

One thing that might make investors hesitant to buy BlackSky is that it hasn’t made a profit since it went public in 2021 through a reverse merger with a special purpose acquisition company (SPAC).

This needs to change as soon as possible. In 2025, it reported revenue of $106.5 million, an increase of 4.4%, and a loss of $2.09 per share, contracting from a loss of $2.67 per share in 2024. It also had positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA, $900) for the second consecutive year. The company posted a fourth-quarter loss of just $868,000, compared to a loss of $24.2 million in the year-ago period.

For 2026, management predicts revenue will be between $120 million and $145 million, a 22% increase at the midpoint, and adjusted EBITDA between $6 million and $18 million, a 122% increase at the midpoint.

Instead of just selling satellite images, BlackSky is now moving to a software-as-a-service (SaaS) model, with tools that automatically highlight what’s changed at a given location between satellite passes, and that provide updates within 90 minutes. This move to a subscription-based model will likely result in higher gross margins comparable to what software companies generate than a typical airline.

In the past few years, the number of international conflicts has increased, requiring countries to reassess their defense needs. While Lockheed and BlackSky primarily market to the US government, both have long-term contracts with US allies.

Lockheed works with 50 countries, and BlackSky (although it keeps some of its deals confidential) has customers in the US, Europe and Asia. This means that even if the United States cuts its defense budget at some point, these companies will have more customers to help them grow.

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James Haley has no position in any of the stocks mentioned. The Motley Fool has and offers positions in Black Sky Technologies. The Motley Fool recommends Lockheed Martin. Motley Fool has a disclosure policy.

2 Great Growth Stocks to Buy Now and Hold for the Long Term Originally Posted by The Motley Fool