The latest bloodletting on Wall Street – Monday’s wicked plunge in the Dow of more than 199 points and yesterday’s drop of 47 points – has re-enforced the need for a reasonably safe haven in today’s increasingly shaky market.

Rather than simply rely on the usual suspects – notably such defensive plays as food, beverages, or drugs – one investment veteran says investors should also think militarily. Namely, he believes Lockheed Martin, the world’s biggest manufacturer of military weapons and the largest provider of information technology services to our government, may fit the bill.

This recommendation for coping with an increasingly dangerous market follows a query I received from Miriam Goldfarb,a reader who picked the right stock and is now wondering whether it’s time to sell. In an e-mail, she wrote: “You quoted some investment advisor a few weeks ago who recommended L-3 Communications, a spinoff from Lockheed Martin. I happen to own Lockheed, which I bought at $61 and is now $72. I’m worried, I don’t like the way the market is acting and I’m temped to take my profit. Could you please check with the advisor and ask him what his strategy on Lockheed would be at this point. Thank you.”

Okay, Ms. Goldfarb, I rang up the adviser, Richard Moroney, editor of Dow Theory Forecasts, a well-regarded monthly investment newsletter out of Hammond, Ind., and he suggests pretty strongly that you hold on to the stock. Not only that, he says he thinks the shares, which are up about 15% from last year’s close of $63.63, have a good shot at reaching $85 in the next 12 months, about an 18% gain from current levels.

One key reason he rates Lockheed a good bulletproof vest in today’s jittery market is his contention that the company is reasonably oblivious to any economic slowdown.

Lockheed’s bottom line also impresses Mr. Moroney, which is understandable. Earnings have averaged robust growth of 20% to 25% a year in recent years. Further, operating profits increased in each segment of the company’s business last year, while per-share earnings ballooned 36% on 5% sales growth. The Street expects more good news ahead, projecting another 24% earnings gain this year for Lockheed, which has beaten consensus estimates by at least 6% in each of the past four quarters.

Part of this better than expected growth reflects the fact that Lockheed is still experiencing growing backlogs, while many defense companies are reporting shrinking backlogs. At yearend, for example, Lockheed’s December quarter backlogs stood at $74.8 billion, up 8% from the prior quarter.

Mr. Moroney expects the company’s earnings growth to slow to between 8% and 10% a year during the next three to five years beginning in 2007 (or to 10% to 15% a year if you factor in probable acquisitions). He still rates the stock a solid buy, observing that Lockheed should keep benefiting from growth in defense spending, while branching out beyond its core military hardware business to meet other government nondefense needs, such as payroll and data processing and tech needs.

What about the slowdown in defense spending that most industry experts expect? Mr. Moroney is quick to point out that the government’s budget request is still 7% higher than last year’s spending and 48% higher than the 2001 budget. (President Bush has proposed a defense budget of $439.3 billion for fiscal 2007 beginning October, up from an enacted $466.6 billion in the current fiscal year, which included about $56 billion in supplemental funding to fight the war on terror.)

Further, to counter the expected slowdown, Lockheed is seeking an offset by building up its information technology business, which is already paying off, Mr. Moroney says. For example, in March, Lockheed won a sixyear, $305 million contract from the FBI to build a new computer system that will streamline the agency’s paper-intensive internal processes and facilitate the sharing of information with other agencies.

Yet another incentive for owning Lockeed, according to our bull, is its enticing and below-average stock valuation. At roughly 15 times estimated 2006 earnings of $4.77 a share,versus $3.85 in 2005, the stock trades at a discount to its five-year forward average P/E of 18.

If Lockheed were indeed to recapture that traditional 18 P/E, its shares would be currently sporting a record price tag of about $86. That would be equivalent to a gain of nearly 20% from its current price.

dandordan@aol.com