This article looks at the 10 best performing defense stocks so far in 2025.
The world has been rocked with deadly conflicts over the last few years, with Ukraine and the Middle East up in flames. While the human impact of these wars 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.
READ ALSO: 11 Best American Defense Stocks to Buy Now and 13 Best Defense Stocks to Buy According to Billionaires.
However, American defense stocks have been shaky this year amid mixed statements from the Trump administration on future military spending. Shares fell sharply in February after the US President mentioned he could significantly cut defense expenditure in the future. He made these comments in the context of a potential future conference with China and Russia to discuss cutting military expenditure to spend the money in other areas:
“At some point, when things settle down, I’m going to meet with China and I’m going to meet with Russia, in particular those two, and I’m going to say there’s no reason for us to be spending almost $1 trillion on the military and I’m going to say we can spend this on other things.”
The creation of DOGE has also reshaped investors’ views of the industry. On March 3, the Pentagon, working with DOGE, found some $80 million in what it deemed wasteful funding, which included funds devoted to diversity, equity and inclusion programs, and climate change research.
Despite the downturn, Citi analyst Jason Gursky believes this is the right time to invest in American defense stocks. In a note to clients on March 5, he argued that as long as the global threat environment remains and the United States maintains its leadership role, regardless of whether it is as a sole superpower or as a power in a multi-polar world order, defense spending is expected to remain robust, which would benefit stocks in the sector.
Two recent developments have reinvigorated investor interest in defense stocks. On March 21, Trump unveiled a new next-generation fighter jet, the F-47, to replace the F-22 Raptor. The jet will be for air superiority and have stealth and penetration capabilities that exceed those of the current fleet. The initial contract to proceed with the production is expected to cost approximately $20 billion.
The move adds to the positive momentum after President Trump’s announcement earlier in the month to resurrect America’s military and commercial shipbuilding industry, which he sees as vital to national security, given the strategic competition with China.
With that said, let’s now head over to the list of the best performing stocks in the defense sector so far in 2025.
Photo by Cibi Chakravarthi on Unsplash
Our Methodology
For this article, we went through screeners to identify stocks in the aerospace and defense industry. From there, we picked the top 10 stocks with the highest year-to-date percentage gains in share price, as of the close of business on March 25, 2025. Pure-play aerospace stocks that do not deal in defense contracts have been excluded from the list.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Performing Defense Stocks So Far in 2025
10. Karman Holdings Inc. (NYSE:KRMN)
YTD Gains as of March 25: 24.43%
Karman Holdings Inc. (NYSE:KRMN) specializes in the manufacturing and sale of mission-critical systems for missile, space, and defense programs.
The stock debuted on the NYSE on February 13 and was valued at nearly $4 billion after shares shot up from its initial public offering price of $22 per share to $30.05 on the first day of trading. As of the close of business on March 25, Karman Holdings Inc. (NYSE:KRMN) had gained 24.43% year-to-date, with a market capitalization of $4.94 billion.
Industry experts credit Karman Holdings Inc.’s (NYSE:KRMN) rise to investor appetite for defense and space firms under the new White House administration, with expectations that Trump would push ahead with a race to Moon and Mars, given his friendship with Elon Musk.
Last month, the US President signed an executive order to mandate the process of building an ‘American Iron Dome’, which also presents an opportunity for the company to benefit, given its expertise in areas like hypersonic missile defense.
On March 10, several analysts initiated coverage of Karman Holdings Inc. (NYSE:KRMN) with Buy ratings and impressive price targets, representing a high average upside potential. It is one of the best performing stocks in 2025.
9. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)
YTD Gains as of March 25: 24.94%
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is an American company that develops and fields transformative and affordable products and platforms for national security needs. It is involved in various technological areas, such as unmanned systems, C5ISR, satellite communications, warfighter training, and combat systems.
On March 24, the company announced its addition to the market’s SmallCap Index. The milestone reflected Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)’s continued growth, innovation, strong financial position, and strategic investments in critical national security capabilities.
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) recently declared impressive results for the fiscal year 2024, with a 9.1% organic growth in revenue. GAAP net income for the full year was reported at $16.3 million, compared to a net loss of $8.9 million in 2023. Adjusted EPS was logged at $0.49, growing 17% year-over-year.
The company has also received notable high-value contracts this month, which has added to the investor optimism around the stock. On March 11, Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) secured a potential $50 million deal from the Naval Surface Warfare Center to design and manufacture short, medium-range suborbital vehicles. Later, on March 17, it was awarded a contract for the BQM-177A Subsonic Aerial Target System from the Naval Air Systems Command, with a potential value of up to $19.1 million.
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) also recently announced the groundbreaking of a $50 million Hypersonic System Indiana Payload Integration Facility in Indiana to support critical hypersonic vehicle and payload activities and systems for the MACH-TB. It is one of the best performing stocks in 2025, with year-to-date gains of nearly 25%.
8. Howmet Aerospace Inc. (NYSE:HWM)
YTD Gains as of March 25: 25.92%
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 performing stocks so far in 2025, with year-to-date gains of 25.92%.
On February 13, the company reported stellar results for the fourth quarter and full year 2024. Q4 revenue increased 9.1% year-over-year to reach $1.9 billion, whereas net income grew 33% from last year to $314 million, driven by robust growth in the commercial aerospace business.
Full-year revenue stood at $7.4 billion, up 12% from last year. Howmet Aerospace Inc. (NYSE:HWM)’s net income surged 57% to $1.2 billion. The operating income margin stood at 22%. GAAP EPS for the year was logged at $2.81, compared to $1.83 per share in the prior year.
The company anticipates another strong year ahead, amid rising OEM production rates, continued demand for commercial aviation and engine spare parts, and growth in the defense aerospace aftermarkets. Following the earnings call, several notable analysts raised their price targets for Howmet Aerospace Inc. (NYSE:HWM), attracting investor interest.
Hardman Johnston Global Equity Strategy stated the following regarding Howmet Aerospace Inc. (NYSE:HWM) in its Q4 2024 investor letter:
“From a sector standpoint, the main drivers of the portfolio’s outperformance during the fourth quarter were Industrials and Materials. Within Industrials, Howmet Aerospace Inc. (NYSE:HWM) and Vertiv Holdings Co. were the largest contributors to outperformance. Howmet reported an earnings beat during the quarter with broad-based strength spanning across all key segments. In particular, the company’s Engine Products and Fasteners segment performed well. During the earnings call, management spent significant time describing the emerging new growth driver of industrial gas turbines, which are used in gas power plants, which have become a focus for investors due to accelerating demand from AI data centers. Howmet is the leading supplier to the three major producers of these engines and will benefit from both initial purposes and the long-term maintenance demand.”
Wall Street analysts are bullish on Howmet Aerospace Inc. (NYSE:HWM) with a consensus Buy rating. According to Insider Monkey’s database for Q4 2024, 58 hedge funds held a stake in the company, up from 45 at the end of the third quarter.
7. GE Aerospace (NYSE:GE)
YTD Gains as of March 25: 27.18%
GE Aerospace (NYSE:GE) is a global aerospace propulsion, services, and systems company with an installed base of around 25,000 military and 45,000 commercial aircraft engines. It is one of the best performing stocks so far in 2025, with returns of over 27%.
On March 12, the company stated that it plans on investing up to $1 billion in its US facilities this year to strengthen manufacturing and innovation. The investment amount is nearly twice last year’s commitment and is set to improve engine safety, quality, and delivery. The announcement comes amid a rising travel environment, which is resulting in robust demand for GE Aerospace (NYSE:GE)’s engines and spare parts.
On the defense side, GE Aerospace (NYSE:GE) this month was awarded a $5 billion IDIQ contract from the US Air Force to support Foreign Military Sales (FMS) for the F110-GE-129 engines, which power F-15 and F-16 aircraft operated by American allied nations. The agreement reflects the company’s commitment to America’s defense partnerships and in ensuring operational readiness of fleets globally.
GE Aerospace (NYSE:GE)’s financial performance also remains robust. During Q4 2024, the company topped Wall Street’s earnings estimates. It anticipates a major profit surge in fiscal year 2025 as well, which has further enhanced the stock’s appeal among investors. According to Insider Monkey’s database for Q4 2024, 101 hedge funds held a stake in the company.
6. Embraer S.A. (NYSE:ERJ)
YTD Gains as of March 25: 33.29%
Embraer S.A. (NYSE:ERJ) is a Brazil-based jet manufacturer that produces aircraft for commercial and executive aviation and defense purposes. It is one of the best performing stocks this year.
2025 has been an impressive year for the company, with returns of over 33% year-to-date in its share price, driven by multiple high-value orders. On February 5, Embraer S.A. (NYSE:ERJ) signed a $7 billion agreement with Flexjet for 182 aircraft and 30 options. This is the largest firm order for both companies and is set to double the size of Flexjet’s fleet over the next 5 years.
Later in the month, on February 25, Japan’s ANA Holdings placed an order for 15 Embraer S.A. (NYSE:ERJ) E190-E2 planes to support its domestic operations, with options for an additional five aircraft. The deliveries are expected to commence in 2028.
Investor sentiment has also been strengthened with the visit of Francisco Gomes Neto, Embraer’s President and CEO, to Warsaw in March. According to Reuters, the company is considering establishing an assembly line for its KC-390 military cargo aircraft in Poland, amid a surge in plane sales in Europe.
On February 27, Embraer S.A. (NYSE:ERJ) declared robust results for the fourth quarter and full year 2024. It generated a revenue of $2.3 billion in Q4, up 17% from last year. Full year revenue stood at $6.4 billion, the highest ever in the company’s history. The adjusted EBIT for Q4 was $265 million, with a margin of 11.5%. For 2024, the company generated $780 million with an 11.1% margin. It ended the year with a record order backlog of $26.3 billion.
5. AMMO, Inc. (NASDAQ:POWW)
YTD Gains as of March 25: 33.64%
AMMO, Inc. (NASDAQ:POWW) designs, produces, and markets ammunition for law enforcement and military agencies, recreational shooters, hunters, and individuals requiring self-defense.
On January 21, the company announced selling its ammunition manufacturing assets to Olin’s Winchester for a total cash consideration of $75 million. The transaction is expected to close during the second calendar quarter of 2025.
The move is in line with AMMO, Inc. (NASDAQ:POWW)’s vision to prioritize its high-margin e-commerce platform. It owns GunBroker.com, which is one of the world’s largest online marketplaces for firearms and shooting accessories. The sale of its manufacturing assets will allow the company to further scale its website to capitalize on the growing online marketplace for firearms and shooting products.
AMMO, Inc. (NASDAQ:POWW)’s share price has taken a hit over the past month after it received a notification of deficiency from NASDAQ over the delay in filing its quarterly report for the quarter that ended December 31, 2024. The company also received a deficiency notice in November for not filing the quarterly report timely for the period ending September 30, 2024.
Despite the recent dip, AMMO, Inc. (NASDAQ:POWW) has had healthy returns this year and is among the best-performing stocks so far in 2025.
4. Triumph Group, Inc. (NYSE:TGI)
YTD Gains as of March 25: 36.55%
Triumph Group, Inc. (NYSE:TGI) is an aerospace and defense company that designs, engineers, manufactures, repairs, and overhauls complex aerospace structures and systems for both the commercial and military markets.
It is one of the best performing stocks this year, with year-to-date gains of 36.55%, as of the close of business on March 25. There has been a major spike in Triumph Group, Inc. (NYSE:TGI)’s share price following the February 3 announcement that the company had signed an agreement to be acquired by affiliates of Berkshire Partners and Warburg Pincus for an enterprise value of $3 billion.
Under the terms of the agreement, Triumph Group, Inc. (NYSE:TGI) will become a privately held company after the completion of the acquisition, with its shareholders receiving $26 per share in cash. According to the press release shared by the company, the purchase price represented a 123% premium over TGI’s closing stock price for the 90 days prior to January 31.
On February 24, Triumph Group, Inc. (NYSE:TGI) expanded its role in the M777 Howitzer program by extending its agreement with BAE Systems and the US Army as a strategic supplier of critical components. The company has shipped 2,365 units since 2022 and has 938 units on order. The partnership is expected to open more doors for future military projects, positioning TGI well for further growth in the long run.
Triumph Group, Inc. (NYSE:TGI) recently declared strong results for the third quarter of fiscal 2025. The company reported net sales of $315.6 million, up 11% from last year. Adjusted earnings per share came in at $0.27 and exceeded analyst expectations of $0.24. It had an adjusted EBITDAP margin of 18% and generated $32.3 million in free cash flow during the quarter.
3. Satellogic Inc. (NASDAQ:SATL)
YTD Gains as of March 25: 37.19%
Satellogic Inc. (NASDAQ:SATL) is a vertically integrated geospatial analytics company that delivers real-time insights for consumers, governments, and industries worldwide. The stock has had stellar returns of 269% over the past six months, driven by notable contract awards. With year-to-date gains of over 37%, it is one of the best performing stocks in 2025.
In December last year, the company signed an agreement with Maxar Intelligence to support national security missions. Under the partnership, Maxar will have exclusive rights to task Satellogic Inc. (NASDAQ:SATL)’s constellation and use its satellite imagery to assist the US government and its partners in key missions.
In February this year, Satellogic Inc. (NASDAQ:SATL) and Telespazio Brasil signed a multi-year agreement with Brazil’s Air Force (FAB) to provide low-latency satellite imagery for security operations within the country’s territory. As part of the deal, FAB will receive real-time monitoring and change detection to enhance its situational awareness for decision making in critical operations.
On March 26, Satellogic Inc. (NASDAQ:SATL) announced the consummation of its domestication, under which it has changed its jurisdiction of incorporation from the British Virgin Islands to the State of Delaware. This strategic decision is aimed at strengthening the company’s market position and enhancing investor access.
2. Elbit Systems Ltd. (NASDAQ:ESLT)
YTD Gains as of March 25: 56.94%
Elbit Systems Ltd. (NASDAQ:ESLT) is an Israel-based defense technology company whose share price has more than doubled over the past six months, with several high-value contracts bolstering investor sentiment. With year-to-date gains of nearly 57%, it is among the best performing stocks so far in 2025.
In November, Elbit Systems Ltd. (NASDAQ:ESLT) was awarded contracts worth $335 million to supply defense systems, including rocket launchers and unmanned aircraft, to a European country. In February, the Moroccan military also reportedly signed an agreement with the company for the purchase of self-propelled artillery.
According to reports last week, Elbit Systems Ltd. (NASDAQ:ESLT) has paired with Rafael to deliver an integrated maritime electronic warfare (EW) self-protection suite for frigates of certain NATO member states. The solution will combine cutting-edge decoy countermeasures and the DESEAVER MK-4 Naval Decoy Control & Launching System (DCLS) to enhance soft-kill defense capabilities.
On March 18, the company declared consolidated financial results for the fourth quarter of FY24. Elbit Systems Ltd. (NASDAQ:ESLT)’s revenue was reported at $1.93 billion, improving from $1.63 billion during the prior year’s period. Non-GAAP diluted EPS was logged at $2.66, beating estimates of $1.95 per share and up 71% year-over-year.
According to Insider Monkey’s database for Q4 2024, 15 hedge funds held a stake in the company, up from 13 at the end of the third quarter.
1. Astronics Corporation (NASDAQ:ATRO)
YTD Gains as of March 25: 66.04%
Astronics Corporation (NASDAQ:ATRO) provides advanced technologies to global aerospace, defense, and electronics clients. Some of its offerings include lighting and safety systems, aircraft electronics integration, automated test systems, and distribution and motion systems, among other products and services.
The company’s shares have surged by over 66% this year, making it one of the best performing stocks so far in 2025. About half of the overall returns have come after Astronics Corporation (NASDAQ:ATRO) announced robust financial results for the fourth quarter of FY24 on March 4.
Astronics Corporation (NASDAQ:ATRO)’s sales grew 6.8% year-over-year, while adjusted operating income expanded by 550 basis points. Adjusted EBITDA was posted at $31.5 million, representing 15.1% of sales. The strong performance was driven by an 11.7% increase in aerospace sales, offsetting the $6.6 million decline in Test Systems sales on lower defense revenue.
The positive margins are helping the company improve its cash from operations, which stood at $26.4 million for Q4. Astronics Corporation (NASDAQ:ATRO)’s cash on hand at the end of the quarter was $18.4 million. The company’s net debt was valued at $156.6 million, down from $161.2 million at the end of 2023. It ended the year with a record backlog of $599.2 million.
Astronics Corporation (NASDAQ:ATRO)’s 2025 revenue is forecast to be between $820 million and $860 million, representing a 6% increase over 2024 sales at the midpoint of this range.
Overall, Astronics Corporation (NASDAQ:ATRO) ranks first among the best performing defense stocks so far in 2025. 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 time frame. If you are looking for an AI stock that is more promising than ATRO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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