One of the best defense stocks to watch now is already up over 20% year to date (YTD), and this stock has plenty of profit potential left. In fact, the stock could rise nearly 7% from its current price of $258 per share, according to the mean analyst rating from FactSet.
One catalyst in particular - President-elect Donald Trump - could help this stock soar to new heights...
One analyst expects Trump could increase military defense spending by up to $1 trillion, which would be a major boon for our favorite defense stock to watch now.
Before we look more closely at this defense stock, here's how Trump could increase military spending - and create windfall profits for defense stock investors...
How Trump Could Increase Military Spending by $500 Billion to $1 Trillion
Trump repeatedly called the U.S. military "depleted" during his campaign rallies for the national election. And most recently on Dec. 7, he echoed the same sentiment while visiting Fayetteville, N.C., on a nationwide "thank you" tour. Trump reaffirmed his commitment to arming the military with the best equipment and technology.
Trump has also signaled his commitment to the military through his cabinet appointments. So far, Trump has appointed several generals as advisors or high-level secretaries. Most recently, Trump said he nominated former retired Marine Gen. James "Mad Dog" Mattis as Secretary of Defense. 
Trump is also rumored to have selected retired Marine Gen. John F. Kelly to head the Department of Homeland Security.
One estimate from Forbes says Trump could increase military spending by $500 billion or even up to $1 trillion. So far, Trump himself hasn't mentioned an exact spending figure.
Already, the United States has the largest military budget in the world as of 2016, according to the Stockholm International Peace Research Institute. For 2015, the U.S. defense budget was $596 billion - nearly 3.3% of the entire U.S. gross domestic product.
That's great news for our favorite defense stock to watch now, because it signals that the U.S. defense budget will balloon even more under Trump's presidency.
Trump has been working closely on his military defense plan with the Heritage Foundation's National Defense Panel, according to William Hartung, an analyst at the Center for International Policy. Hartung said Heritage, which is a well-connected conservative organization, supports returning the military budget to levels of fiscal year 2012, which was about $800 billion to $900 billion higher over 10 years than President Obama's most recent FY 2016 budget request.
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Republicans are fortunate to have majorities in Congress - and this almost guarantees that Trump will have an easier time getting a big defense budget approved. What's more, lawmakers across the aisle supported increased military spending over the years, according to Forbes.
All indicators point to a huge defense spending binge under Trump's presidency. And for one of the best defense stocks to watch now, things couldn't look any better...
This Is One of the Best Defense Stocks to Watch
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Lockheed Martin Corp. (NYSE: LMT) will be one of the primary beneficiaries of a large defense spending budget.
The defense giant already has some of the most lucrative government contracts in the world. Take its aircraft contracts, for instance. Back in the early 2000s, Lockheed struck a more than $400 billion deal with the Pentagon to make the highly advanced F-35 fighter jets. This was one of the largest aircraft deals since the F-16 back in the 1970s, which was also created by Lockheed.
Lockheed also has F-35 contracts with U.S. allies. Including both foreign and domestic contracts, Lockheed will produce a total of 3,100 F-35s, according to a report from the F-35 Joint Strike Fighter Program Office.
What's more, a leaked Trump campaign memo from October suggested that the president-elect wants to grow the U.S. Air Force fleet by 900 to 1,200. The easiest way to do that would be to procure additional F-35s, bolstering the Pentagon's existing F-35 contract. To accomplish this, the Air Force would require an extra $30 billion over the next four years. That's more money for Lockheed - and potentially great news for Lockheed investors.
Besides its F-35 program, Lockheed also has another powerful play up its sleeve: Its Sikorsky Aircraft division. Last year, Lockheed purchased Sikorsky for $9 billion, and already the acquisition is paying off. Sikorsky added $1.2 billion in net sales to Lockheed's total $11.6 billion Q3 2016 haul.
One of Sikorsky's most promising technologies under development is called an Aerial Reconfigurable Embedded System (ARES). This technology allows aircraft to fly without a pilot while carrying massive payloads of troops - and sometimes entire vehicles. ARES also helps aircraft become more nimble and modular, so they can easily maneuver in hostile enemy territories, deploying troops and aid in places otherwise too dangerous. The program has already been granted special status by the U.S. Defense Advanced Research Projects Agency. This is a strong indicator that the technology - once it becomes available - will be snatched up by the U.S. military and its allies.
Lastly, Trump has vowed to "destroy" ISIS, which could involve years of military involvement in the Middle East. And while this is unfortunate, Lockheed also makes cutting-edge products that the U.S. military can't afford not to have...
And that's why Lockheed is one of the best defense stock plays you can make.
One last thing to note, though. Although LMT is the perfect long-term stock to pick up at any time, more cautious investors might want to wait until the stock pulls back from its 52-week high of $269. LMT is currently trading at $260 per share.
In terms of proximity, the Federal Reserve meeting on Dec. 13-14 might be your best chance. The Fed is widely expected to raise rates, which might present a pullback opportunity. Although, the markets might already be pricing in this fact, so there's no guarantee.
The Bottom Line: President-elect Trump could boost military spending by up to $1 trillion. This bodes well for Lockheed Martin, one of the best defense stocks on the market right now. Investors that already own Lockheed will want to hold onto it for the next four years. Investors that are thinking about picking up shares of the defense giant might want to wait until it pulls back slightly from its 52-week high.
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