The world’s best hedge funds and investors tend to look at more abstract data than the average retail investor does. Now, some of this data might not be accessible, such as satellite feeds to figure out parking lot traffic and predict a financial quarter for a retail stock. However, other data points and public information are free to access, which still generates an advantage for those who look over them.

Today, the data investors can look over is found in which companies are receiving new government contracts, as the expectation is to see higher demand for their services and products in the coming months. Through this database, investors will land on the top three stocks, earning multi-million dollar contracts from the United States government. They are all focused on the theme of arms and defense, with a mix of cybersecurity in the technology sector.

This list includes names representing the defense sector, such as General Dynamics Co. (NYSE: GD) and Lockheed Martin Co. (NYSE: LMT). Then there is Oracle CO. (NYSE: ORCL), which is in the cybersecurity end of the market. It makes sense for the government to call upon these companies to ramp up national security, especially as geopolitical conflicts are on the rise in the Middle East, and that creates an opportunity for retail investors to take advantage of.

Multi-Million Dollar Contract Drives Analyst Upgrades for General Dynamics Stock

The latest reports show a contract of up to $614 million for General Dynamics, a decision from the government that comes at a time when the conflicts between Israel and other nations escalate, leading U.S. allies to call for military support.

Based on this current contract, Wall Street analysts think that the company could generate additional revenue and earnings, a view that they have reflected in their price targets today. While the consensus valuation is for $317 a share today, calling for a 6.7% upside from today’s prices, investors should focus on the outliers.

Leading the bullish sentiment, Morgan Stanley thinks that General Dynamics could get up to $345 a share, implying a net upside of 16.5% from where the stock trades today. Considering the stock already trades at 97% of its 52-week high, these analysts now expect to see a new high for the year in this stock, something investors need to keep in mind.

The earnings per share (EPS) forecast today is driving these valuations higher. Wall Street has landed on a projection for $4.22 a share in the next 12 months, a significant jump of 29.5% from this quarter’s $3.26. It’s not often that investors see a $81.1 billion company offer double-digit upside and EPS growth, but that’s the effect new contracts have.

Lockheed Martin Called Upon Global Conflicts: Stock Gains Investor Favor

This is another defense stock trading near its 52-week high, at 95% this time, to show investors the market does have a reasonable preference for this stock during today's ongoing military conflicts. The price action is only the beginning of the bullish story in this stock, though, as Wall Street has also broken out with its own set of gauges.

Starting with analysts, those at the Royal Bank of Canada have landed an "Outperform" rating as recently as October 2024. This time, they chose to go with a price target boost as well, projecting Lockheed Martin stock to $675 a share to imply up to 12% net upside from where the company trades today, which is also a new yearly high.

The latest database updates show up to $599 million in capital being granted to Lockheed Martin as a government contract, giving investors a new viewpoint as to how important this stock is becoming in the eyes of the market and today's national security concerns.

Knowing this is the new reality for Lockheed Martin stock, markets are now willing to overpay for exposure to its future earnings. On a price-to-book (P/B) ratio, Lockheed Martin stock trades at a high 21.4x multiple, significantly above the aerospace sector's average valuation of 5.6x P/B today. Commanding a premium is always justified with underlying growth, and Lockheed wants to deliver on that.

Cybersecurity Concerns Rise, Positioning Oracle for Major Government Grants

Conflicts are now extending past the physical front and taking on a new shape through technology, where cybersecurity capabilities become more important for leading nations to cover as conflicts rise.

This is why the U.S. granted Oracle up to $358.6 million over the past quarter, calling on its services and technology to help.

Of course, this raises sentiment among Wall Street analysts and other investors, which is why analysts at Sanford C. Bernstein have reiterated their “Outperform” rating on Oracle stock, a view that came alongside a price target of $202 a share.

To prove these new valuations right, the stock must rally as much as 17% upside from where Oracle stock trades today. This would make for another new 52-week high, setting the bullish momentum trend for these defense and national security stocks, which the government prefers and picks.