This article looks at the 10 best large cap defense stocks to buy now. We discuss how the industry performed in 2024 and analysts’ opinions of what to expect under Trump’s second stint as President.
The world has been rocked with conflict over the last few years, with the number of conflict zones worldwide increasing by nearly two-thirds since 2021. Ukraine, the Middle East, and parts of Africa have been the most intense theatres of war during this period.
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While the human impact of these conflicts has been tragic, the defense industry has profited by luring investors into piling up their stocks, with several of the world’s top contractors seeing their shares book all-time highs in 2024. An Aerospace & Defense ETF issued by iShares had returns of over 17% during the last calendar year. It is up 5.38% this year, as of February 14.
Defense sector experts see long-term growth potential under the Trump administration, as he is credited for leaving a mark on the U.S. military during his first stint, which saw the establishment of the United States Space Force (USSF) and defense spending reach record highs. During his election campaign, the 78-year-old repeatedly made mention of wanting to build a missile defense shield for the country, similar to the Iron Dome.
However, defense stocks fell sharply last week after Trump suggested the country could rapidly cut military spending in the future. He made these comments in the context of a potential future conference with China and Russia to discuss cutting defense expenditure to spend the money in other areas.
“When we straighten it all out, then one of the first meetings I want to have is with President Xi of China and President Putin of Russia, and I want to say let’s cut our military budget in half. And we can do that, and I think we’ll be able to do that.”
The U.S. president has shared mixed statements on defense spending throughout his campaign and the early days of his second stint. Trump has appointed Elon Musk to lead the Department of Government Efficiency (DOGE), which will work outside the federal stream and aims to improve governance by reducing wasteful spending, cutting unnecessary regulations, and restructuring federal agencies.
Trump has also vowed to end the tumultuous wars in Ukraine and the Middle East. Some analysts view his anti-war stance as detrimental to defense stocks. Russell Hackmann, president at Hackmann Wealth Partners, stated the following while talking to Quartz on November 4.
“Trump is more anti-war and therefore that is worse for the defense stocks.”
With that said, let’s now head over to the list of the 10 best large cap stocks to buy in the defense sector.
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Methodology
We used stock screeners to identify companies in the aerospace and defense industry with a market cap between $10 billion and $200 billion as of the close of business on February 14, 2025. Then, we picked the top 10 stocks with the highest number of hedge fund stakes. We ranked them in ascending order of hedge fund holders in each company.
Data on hedge funds was sourced from Insider Monkey’s database of 900 hedge funds for the third quarter of 2024. In the case where two or more stocks were tied on the number of hedge fund holders, we outranked one over the other on market capitalization.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Large Cap Stocks to Buy Now
10. L3Harris Technologies, Inc. (NYSE:LHX)
Market Cap: $37.48 billion
Number of Hedge Fund Holders: 40
L3Harris Technologies, Inc. (NYSE:LHX) is known for its wireless and night vision equipment, command and control systems, avionics, and terrestrial and spaceborne antennas. It was formed in 2019 after Harris Corporation and L3 Technologies merged.
On January 21, the U.S. Army awarded L3Harris Technologies, Inc. (NYSE:LHX) a $263 million contract for additional production of Enhanced Night Vision Goggle–Binocular (ENVG-B) systems, which will boost the capabilities of American troops to identify and engage enemy targets in low-light conditions.
L3Harris Technologies, Inc. (NYSE:LHX) is also at the forefront of several critical space programs for the U.S. military. It received a contract in January from the Space Force’s Space Systems Command to design concepts for the Resilient GPS program. The company is also building infrared space vehicles for the SDA’s Tranche 2 Tracking Layer program to provide missile warning and tracking.
During its Q4 2024 earnings call on January 30, L3Harris Technologies, Inc. (NYSE:LHX) reported non-GAAP diluted earnings per share of $3.47, beating expectations. This was driven by robust demand across the business coupled with operational efficiencies. Revenue for the full year stood at $21.3 billion, up 10% year-over-year. The company received orders worth $24.2 billion during the year, with a book-to-bill ratio of 1.14x.
The company ended the year with a record backlog of $34 billion, which positions L3Harris Technologies, Inc. (NYSE:LHX) well for fiscal 2025. Wall Street analysts are bullish on the stock, with a consensus Buy rating and an average share price upside potential of 33%. It is one of the best large cap stocks to buy now.
9. Howmet Aerospace Inc. (NYSE:HWM)
Market Cap: $54.2 billion
Number of Hedge Fund Holders: 45
Howmet Aerospace Inc. (NYSE:HWM) manufactures components for aircraft engines, fasteners, aluminum wheels for trucks, and titanium structures for aerospace and defense applications. It is one of the best large cap stocks to buy now.
During its Q4 2024 earnings call on February 13, Howmet Aerospace Inc. (NYSE:HWM) reported a revenue of $1.9 billion for the quarter. This was up 9% from last year, driven by growth in the commercial aerospace market. Net income was posted at $314 million, growing 33% from last year. Fourth-quarter adjusted EBITDA increased 27% year-over-year and was attributed to commercial and defense aerospace market growth.
Howmet Aerospace Inc. (NYSE:HWM) generated $977 million of free cash flow in fiscal 2024, which has helped maintain a strong balance sheet and supported attractive shareholder returns. The company deployed around $975 million in stock repurchases, debt reduction, and dividends during the year. On January 27, the Board approved a further 25% hike in dividends, reiterating HWM’s commitment to robust returns.
After strong results in 2024, Howmet Aerospace Inc. (NYSE:HWM) has raised its guidance for fiscal 2025 and now expects revenue growth to be around 8% year-over-year, coupled with improved profitability and cash generation. The encouraging outlook has been fueled by rising OEM production rates, strong demand for commercial aviation and engine spare parts, and continued growth in the defense aerospace aftermarkets.
Howmet Aerospace Inc. (NYSE:HWM) is one of the best large cap stocks to buy in the aerospace and defense sector, with Wall Street analysts having a consensus Buy rating for the stock. According to Insider Monkey’s database for Q3 2024, 45 hedge funds held a stake in the company, remaining unchanged from the second quarter.
8. Axon Enterprise, Inc. (NASDAQ:AXON)
Market Cap: $52.11 billion
Number of Hedge Fund Holders: 46
Axon Enterprise, Inc. (NASDAQ:AXON) manufactures weapons and technology for law enforcement agencies, military, and civilian use. The company integrates cloud software solutions and hardware devices to help enable modern policing, defense, and security. It has a diverse product catalog featuring conducted energy devices, cameras, and sensors, among others.
The company’s share price has surged by nearly 700% over the last five years, helped by several strategic acquisitions and partnerships formed during the period, and robust demand for its TASER segment. Another major driver behind the gains has been Axon Enterprise, Inc. (NASDAQ:AXON)’s strong financial performance. As of Q3 2024, the global public safety technology leader had marked 11 successive quarters of 25% revenue growth.
Investors have been encouraged by Axon Enterprise, Inc. (NASDAQ:AXON)’s results, which is reflected in the number of hedge funds having a stake in the company growing to 46 at the end of the third quarter of 2024, from 36 in Q2, according to Insider Monkey. Conestoga Capital Advisors stated the following regarding Axon in its Q4 2024 investor letter:
Axon Enterprise, Inc. (NASDAQ:AXON) continued to see robust demand for its products and services, from TASERs to body cameras to the software that powers many applications within public safety operations. Shares jumped on third-quarter results, which saw revenue grow 32%, EBITDA 58%, and backlog 33% to $7.7 billion. In addition, AXON continued to expand adjusted EBITDA margins, which were above 25% in the third quarter. AXON was a leader in three of the four quarters in 2024.
Wall Street sentiment around the company also remains bullish, with analysts having a consensus Strong Buy rating for the stock, making Axon Enterprise, Inc. (NASDAQ:AXON) one of the best large cap stocks to buy now.
7. Northrop Grumman Corporation (NYSE:NOC)
Market Cap: $63.53 billion
Number of Hedge Fund Holders: 48
Northrop Grumman Corporation (NYSE:NOC) is one of the largest defense contractors in the world. It is the manufacturer of the B-21 Raider for the United States Air Force (USAF), which is intended to replace the aging B-1B Lancer and B-2 Spirit fleets.
On February 12, Northrop Grumman Corporation (NYSE:NOC) secured two contracts worth $1.4 billion to modernize the air and missile defense capabilities of the United States and Poland. Both contracts focus on the Integrated Battle Command System (IBCS) to help Washington and its allies stay ahead of emerging threats.
The company is also recognized as a leader in autonomous aerial systems. It has developed the MQ-4C Triton, which is one of the most advanced maritime ISR UAVs deployed today. On February 6, it was reported that Northrop Grumman Corporation (NYSE:NOC) had completed testing of the third MQ-4C Triton ordered by Australia, and was preparing to ferry the aircraft to Maryland for calibration testing before delivery later this year.
Northrop Grumman Corporation (NYSE:NOC) is also working on several critical contracts for the US Space Force. In December 2024, the defense contractor was awarded a contract extension for Phase 2 of its Next Gen OPIR Polar (NGP). The program is aimed at providing coverage of the North Pole to detect missile threats from adversaries.
On January 30, the company reported strong results for fiscal 2024. Sales climbed 4% year-over-year to reach $41 billion, driven by continued robust demand for NOC’s weapons. Net awards for the year totaled $50.6 billion, while it ended the year with a record backlog of $91.5 billion.
Wall Street analysts are bullish on Northrop Grumman Corporation (NYSE:NOC), with a consensus Buy rating and an average share price upside potential of over 25%, making it one of the best large cap stocks to buy.
6. General Dynamics Corporation (NYSE:GD)
Market Cap: $65.41 billion
Number of Hedge Fund Holders: 48
General Dynamics Corporation (NYSE:GD) is a leading global aerospace and defense company, operating through its Aerospace, Marine Systems, Combat Systems, and Technologies segments.
On December 20, the company announced receiving a five-year, $5.6 billion Mission Partner Environments (MPEs) contract. Under the agreement, General Dynamics Corporation (NYSE:GD) would modernize, integrate, operate, and sustain the DoD’s MPE to ensure that the military and its partners can have secure communication and share real-time information at all levels to make rapid decisions to adapt to changing mission dynamics.
In November, General Dynamics Corporation (NYSE:GD)’s Gulfstream Aerospace business unit clinched a $991 million contractor logistics support services (CLS) contract from the Air Force for C-20 and C-37 fleets. The seven-year contract will also provide services to the Navy, Army, Marine Corps, and Coast Guard. It includes a variety of support, including global maintenance, repair, component overhaul, and modification services.
Amid the turbulent situation in Ukraine and the Middle East, several countries are spending hefty amounts to secure their borders. This has resulted in a surge in demand for fighter jets and military aircraft and with it the need for their repair and maintenance, which sets General Dynamics Corporation (NYSE:GD) well-positioned to make gains in this space.
On January 29, the company reported strong results for the full year 2024, with steady growth in revenue and earnings across all business segments. Net earnings were posted at $3.8 billion, up 14.1% year-over-year, while revenue surged 12.9% from 2023, to reach $47.7 billion.
General Dynamics Corporation (NYSE:GD) is one of the best large cap stocks to buy. Wall Street analysts are bullish on the company, with a consensus Buy rating, and an average share price upside potential of nearly 25%.
5. The Boeing Company (NYSE:BA)
Market Cap: $138.33 billion
Number of Hedge Fund Holders: 52
The Boeing Company (NYSE:BA) is a leading aerospace company that manufactures commercial airplanes, space systems, and defense equipment for customers in over 150 countries.
2024 was a difficult year for the company, marred by a door blowout during a flight, which led to a slowdown in the production of airplanes, with an increased focus on safety. The company’s operations were also hampered by a seven-week workers strike for higher wages, job security, and a restoration of their pension.
The Boeing Company (NYSE:BA)’s share price slumped by 30% during the calendar year, while also suffering heavy losses. During its Q4 2024 earnings call on January 28, the company reported a quarterly loss of $3.8 billion, which translated to a loss per share of $5.90. Full-year losses were logged at $11.8 billion. According to a report in The Associated Press, Boeing has had losses of over $35 billion since 2019.
However, despite a grim year, The Boeing Company (NYSE:BA) delivered 348 commercial planes and recorded 279 net new orders during 2024. It also grew its backlog to $521 billion. Most analysts believe that Boeing is too big a company to fail and considering its backlog of orders and international travel growing every year, it is bound to recover once the headwinds are over.
Wall Street analysts have a consensus Buy rating for the stock and expect a 9% uptick, on average, in Boeing’s share price. With a market cap of over $138 billion, it is one of the best large cap stocks to buy.
4. HEICO Corporation (NYSE:HEI)
Market Cap: $27.05 billion
Number of Hedge Fund Holders: 57
HEICO Corporation (NYSE:HEI) is an aerospace and technology company that manufactures jet engines and aircraft parts. It operates in two segments: Flight Support Group and Electronic Technologies Group.
The company is a prime contractor for the U.S. Department of Defense. For the past several decades, it has supported the government through activities such as reverse engineering, manufacturing aircraft engines and parts, and repair and maintenance services.
HEICO Corporation (NYSE:HEI) is also recognized as an important player in the space industry, as it is credited for supplying critical mission components for India’s Chandrayaan-3 spacecraft, which landed on the Moon in 2023.
On December 17, HEICO Corporation (NYSE:HEI) reported strong results for full-year 2024, with net income increasing 27% year-over-year to reach a record $514.1 million. The company also declared a semiannual cash dividend of 11 cents per share. This marked HEICO’s 93rd successive semiannual cash dividend since 1979, which reflected its strong commitment to shareholder returns.
Looking ahead, HEICO Corporation (NYSE:HEI) forecasts net sales growth across both business segments in 2025 in anticipation of sustained demand for a majority of its products. Wall Street analysts are also bullish on the stock, with a consensus Buy rating and an average share price upside potential of 22%.
Investor sentiment continues to improve as well. According to Insider Monkey’s database for Q3 2024, 57 hedge funds held a stake in the company, up from 53 at the end of the second quarter. HEICO Corporation (NYSE:HEI) is among the best large cap stocks to buy.
3. Lockheed Martin Corporation (NYSE:LMT)
Market Cap: $99.61 billion
Number of Hedge Fund Holders: 58
Lockheed Martin Corporation (NYSE:LMT) is one of the largest defense contractors in the world. The company specializes in the research, design, and development of advanced technology systems, products, and services. It is among the best large cap stocks to buy.
Lockheed Martin Corporation (NYSE:LMT) is famed for producing some of the most notable military aircraft in history, including the F-35 fifth-generation fighter jet. The company also plays a vital role in delivering advanced autonomous solutions to the U.S. military and partners with the government to deliver breakthrough technologies aimed at further discovering space.
During its Q4 2024 earnings call on January 28, Lockheed Martin Corporation (NYSE:LMT) reported net sales of $18.6 billion for the quarter, down from $18.9 billion during the same period last year. It posted a net income of $527 million, representing a 71% year-over-year slide, driven by heavy losses associated with certain classified programs.
Lockheed Martin Corporation (NYSE:LMT)’s share price has fallen by 16% since the earnings call in which the company also shared a cautious profit outlook for fiscal 2025, amid a delay in the rollout of upgrades for the F-35. Moreover, while arms manufacturers were expected to get a boost under the Trump administration, the formation of DOGE has soured investor sentiment in defense stocks.
Despite a challenging environment, most Wall Street analysts remain bullish on Lockheed Martin Corporation (NYSE:LMT) with a consensus Buy rating and an average share price upside potential of 31% – the latter hinting at a recovery in the share price once the headwinds are over. The company remains a partner of choice for most American allies amid the worsening security situation in different parts of the world.
2. TransDigm Group Incorporated (NYSE:TDG)
Market Cap: $73.71 billion
Number of Hedge Fund Holders: 71
TransDigm Group Incorporated (NYSE:TDG) is an aerospace company that manufactures engineered aircraft components for commercial and military aircraft. Its share price has more than doubled over the last five years. The company was recently listed among the 15 Highest-Priced Stocks Right Now.
TransDigm Group Incorporated (NYSE:TDG) executed notable acquisitions in 2024, aimed at further solidifying its position in the aerospace and defense markets. These are also expected to add significant future revenue for the company. In June last year, it acquired Communications & Power Industries’ Electron Device business for $1.385 billion. Later, in July, it completed the $655 million acquisition of Raptor Scientific.
The company’s financial position remains robust. On February 4, TransDigm Group Incorporated (NYSE:TDG) declared results for the first quarter of fiscal 2025. It reported a net income of $493 million, up 29% year-over-year. This was driven by a 12% increase in net sales from last year. Adjusted EPS stood at $7.83, growing 9% from the prior year’s quarter.
Wall Street analysts are bullish on the stock, with a consensus Buy rating and an average share price upside potential of 12%. According to Insider Monkey’s database for Q3 2024, 71 hedge funds held a stake in the company. AltaRock Partners was the largest investor in TransDigm Group Incorporated (NYSE:TDG), with holdings valued at over $1.26 billion, as of December 31, 2024.
1. RTX Corporation (NYSE:RTX)
Market Cap: $163.07 billion
Number of Hedge Fund Holders: 72
RTX Corporation (NYSE:RTX) is a giant in the global aerospace and defense industry. It provides systems and services to commercial, military, and government clients. It operates through three main businesses: Collins Aerospace, Pratt & Whitney, and Raytheon.
The company continues to receive high-value defense contracts, which has made it an attractive stock for investors. On January 3, RTX Corporation (NYSE:RTX) was awarded a $946 million contract to supply additional Patriot air and missile defense systems to Romania. The contract is inclusive of radars, missiles, and control stations.
In October last year, RTX Corporation (NYSE:RTX) clinched a $736 million deal from the Navy to produce AIM-9X SIDEWINDER missiles. Later, in December, it won a $590 million production contract – again from the Navy – for the Next Generation Jammer Mid-Band (NGJ-MB) system.
During its Q4 2024 earnings call on January 28, RTX Corporation (NYSE:RTX) reported $21.6 billion in quarterly sales, up 9% compared to last year. Adjusted EPS was logged at $1.54, beating expectations of $1.38 per share. The company ended the year with a backlog of $218 billion, up 11% year-over-year. Moreover, it returned $852 million in capital to shareholders during the quarter.
Investor sentiment around RTX Corporation (NYSE:RTX) remains robust. According to Insider Monkey’s database for Q3 2024, 72 hedge funds held a stake in the company, up from 54 at the end of the second quarter. Longleaf Partners Fund stated the following regarding RTX in its Q4 2024 investor letter:
RTX Corporation (NYSE:RTX) – Aerospace and defense company RTX was a top contributor for the year. Our appraisal value has grown nicely since we first purchased the company just over a year ago. While the issues for Pratt & Whitney’s (P&W) Geared Turbofan engine are still not yet fully fixed, they have gotten better and given us another reminder that the point of maximum pessimism is only obvious in retrospect. We continue to have a conservative valuation on P&W so view this as a source of future value upside. The Raytheon segment has also performed better as the year has gone on, with recent signs of margin improvement. Strong industry tailwinds, prudent capital allocation and a solid balance sheet provide a foundation for sustained growth and eventual full value recognition.
Overall, RTX ranks first among the 10 Best Large Cap Defense Stocks to Buy Now. While we acknowledge the potential of defense companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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