This article looks at the 11 best American defense stocks to buy now.
America’s defense sector has struggled under Trump’s second term as president, amid mixed views on military expenditure in the early days of his second stint. Shares were volatile last month following his statement to cut defense spending in the future, and later in response to a contentious spat with visiting Ukrainian leader, Volodymyr Zelensky, at the Oval Office.
The creation of DOGE is also reshaping investors’ views of the industry. Byron Callan, managing partner at Capital Alpha Partners, believes there is a high level of uncertainty in the US defense sector related to current and future programs and the likelihood of severe cuts to government workforces.
READ ALSO: 13 Best Defense Stocks to Buy According to Billionaires and 10 Best Large Cap Defense Stocks to Buy Now.
On the other hand, Trump’s pivot on Ukraine has fueled robust gains in defense stocks elsewhere, especially in Europe, where several armament manufacturers have seen double-digit growth this year, with some even reaching record highs, as governments faced pressures to increase military expenditure.
Washington has repeatedly called for Europe to spend more on defense, while stressing that the US could no longer foot the bill. EU leaders met in Brussels last week to discuss the ‘ReArm Europe Plan’, which will allow the bloc to mobilize funds up to $860 million through bonds and relaxed rules on borrowing and spending.
According to a report in Reuters, asset managers across Europe are planning to increase exposure to defense stocks, under pressure from investors and politicians to loosen restrictions. Funds that have been badged as ‘sustainable’ under the EU’s rules are required to ensure their investments do no significant harm, because of which they tend to avoid the sector completely.
Several Korean companies have also benefited from Europe’s defense splurge. While the performance of the US defense sector was lagging behind Europe and Asia well before the presidential elections, the gap has widened after Trump’s victory.
Despite a grim outlook, Citi analyst, Jason Gursky, is urging investors that this is the right time to buy American defense stocks. Here is what he wrote in a note to clients last week:
“We recognize the world order is evolving under the current President, perhaps to a multi-polar one in which three countries control spheres of influence over the Americas, Europe and Asia. However, we don’t view that world to be any less dangerous or one that decreases the need to acquire the tools of deterrence.”
Trump’s recent statement on resurrecting American military and commercial shipbuilding has also been well-received. Shares of a major naval defense contractor have surged over the past week, following the announcement. The US president has vowed to fix the industry, which he sees as vital to national security, given the strategic competition with China. Given this, we will take a look at some of the best defense stocks to buy.
Our Methodology
For this article, we sifted through screeners to identify American stocks in the aerospace and defense industry. From there, we selected the 11 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of over 1,000 prominent hedge funds as of Q4 2024.
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).
11 Best American Defense Stocks to Buy Now
11. Curtiss-Wright Corporation (NYSE:CW)
Number of Hedge Fund Holders: 50
Curtiss-Wright Corporation (NYSE:CW) provides engineered products, solutions and services for the aerospace and defense markets. The company operates through three segments: Aerospace & Industrial, Defense Electronics, and Naval & Power.
On March 11, the Naval Air Systems Command awarded Curtiss-Wright Corporation (NYSE:CW)’s Defense Solutions Division a $50 million IDIQ contract to provide high-speed data acquisition systems for its Special Flight Test Instrumentation Pool. The contract is scheduled to run through January 2030.
Earlier in the month, the company also received an $18 million follow-on order from the Marine Corps to provide tactical communications technology for the Application Server Module (ASM), which is part of the Combat Data Network (CDN) program. Under the contract, Curtiss-Wright Corporation (NYSE:CW) will supply its PacStar 451 Server, PacStar 453 GPU Enhanced Server, and PacStar 448 10-port 10 GbE Switch modules.
In January this year, Curtiss-Wright Corporation (NYSE:CW) completed the $200 million acquisition of Ultra Energy, a manufacturer of reactor protection systems, radiation and neutron monitoring systems, and temperature and pressure sensors to ensure the safe operation of nuclear reactors and other power generation plants.
Recent defense contracts and the strategic acquisition of Ultra Energy position the company well for growth over the long run. Curtiss-Wright Corporation (NYSE:CW) had a robust fiscal 2024, with sales growing 10% year-over-year to $3.1 billion. Adjusted diluted EPS was logged at $10.90, increasing 16% compared to the prior year. It ended the year with an impressive order backlog of $3.4 billion.
According to Insider Monkey’s database for Q4 2024, 50 hedge funds held a stake in the company. It is one of the best defense stocks to buy now.
10. Northrop Grumman Corporation (NYSE:NOC)
Number of Hedge Fund Holders: 54
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 March 5, the company announced that it was delivering strong performance in the test and production of the B-21 Raider. During Q4 last year, it received an LRIP Lot 2 award, signalling the Air Force’s confidence in the program’s progress.
Northrop Grumman Corporation (NYSE:NOC) continues to receive high-value defense contracts, which has made it an attractive stock for investors. On March 12, the Department of Defense awarded a $16.6 million contract to NOC’s business segment, Defense Systems, to aid Lebanon Air Force’s C-208 Aircraft.
Last month, Northrop Grumman Corporation (NYSE:NOC) received two contracts, both focused on IBCS, with a total value of $1.4 billion, to modernize the air and missile defense capabilities of the United States and Poland. It also signed a MoU with Hanwha Systems to produce ALMDS hardware components for South Korea’s Mine Countermeasures Helicopter (KMCH) program.
Northrop Grumman Corporation (NYSE:NOC)’s sales climbed 4% in fiscal 2024 to reach $41 billion. Net awards for the year totaled $50.6 billion, enabling the company to end the year with a record backlog of $91.5 billion. According to Insider Monkey’s database for Q4 2024, 54 hedge funds held a stake in the company. It is one of the best defense stocks to buy now.
9. BWX Technologies, Inc. (NYSE:BWXT)
Number of Hedge Fund Holders: 55
BWX Technologies, Inc. (NYSE:BWXT) is an aerospace and defense company focused on providing nuclear solutions for global security, environmental protection, clean energy, and space exploration. It operates 15 major operating sites in the US, UK, and Canada.
According to Insider Monkey’s database for Q4 2024, 55 hedge funds held a stake in the company, making it one of the best defense stocks to buy now. Balyasny Asset Management was the largest investor in BWX Technologies, Inc. (NYSE:BWXT), with holdings valued at over $102 million, as of December 31, 2024.
On February 24, BWX Technologies, Inc. (NYSE:BWXT) announced better-than-anticipated results for the fourth quarter of fiscal 2024. It reported a revenue of $746.3 million, growing 2.9% year-over-year. Net income stood at $71.1 million, improving from $66.3 million in the prior year. The company also provided an upbeat forecast for 2025, which has led to a bullish sentiment around the stock.
Last month, BWX Technologies, Inc. (NYSE:BWXT) was awarded contracts worth $2.1 billion to manufacture reactor components under the US Naval Nuclear Propulsion Program. The agreements will support the construction activities of the Ford-class aircraft carriers and the Columbia and Virginia class submarines.
In January, the company also secured contracts for two major nuclear energy projects valued at over C$1 billion. Under the first contract, BWX Technologies, Inc. (NYSE:BWXT) will manufacture 48 steam generators for the Pickering life extension program. It will build a reactor pressure vessel (RPV) for GE Hitachi Nuclear Energy’s BWRX-300 SMR as part of the second contract.
8. Howmet Aerospace Inc. (NYSE:HWM)
Number of Hedge Fund Holders: 58
Howmet Aerospace Inc. (NYSE:HWM) manufactures components for aircraft engines, fasteners, aluminum wheels for trucks, and titanium structures for aerospace and defense applications.
The company recently reported strong results for the fourth quarter and full year 2024. Driven by robust growth in the commercial aerospace business, Q4 revenue was up 9% year-over-year to $1.9 billion. Net income was posted at $314 million, growing 33% from last year.
Howmet Aerospace Inc. (NYSE:HWM)’s full year revenue stood at $7.4 billion, increasing 12% from last year. Net income surged 57% to $1.2 billion. 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 also shared its revised guidance for fiscal 2025. It raised revenue growth expectations to 8% year-over-year and anticipates improved profitability and cash generation. The company is seeing 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 results, several analysts raised their price targets for Howmet Aerospace Inc. (NYSE:HWM), while maintaining their Buy and Strong Buy ratings. 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. It is among the best defense stocks to buy now.
7. Axon Enterprise, Inc. (NASDAQ:AXON)
Number of Hedge Fund Holders: 64
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.
On March 5, the company announced proposed offerings of $1.5 billion in senior notes due 2030 and 2033. Axon Enterprise, Inc. (NASDAQ:AXON) intends to use the proceeds for general corporate purposes, which may include providing capital to support growth initiatives, potential share repurchases, and redemption of convertible senior notes due 2027.
Axon Enterprise, Inc. (NASDAQ:AXON) recently announced impressive results for fiscal 2024. It generated a revenue of $2.1 billion, up 33% from last year, and nearly double from the figure two years ago. The company also marked 12 successive quarters of 25%+ revenue growth.
Annual net income stood at $377 million, supporting the non-GAAP net income of $466 million. Axon Enterprise, Inc. (NASDAQ:AXON) is heading into 2025 with positive momentum and expects to deliver around 25% growth in annual and adjusted EBITDA margin, both, for the current fiscal year.
Axon Enterprise, Inc. (NASDAQ:AXON) is one of the best defense stocks to buy now. Wall Street analysts are bullish on the stock with a consensus Strong Buy rating. According to Insider Monkey’s database for Q4 2024, 64 hedge funds held a stake in the company, up from 46 at the end of the third quarter.
6. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 65
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 the maker of the famed F-35 fifth-generation fighter jet.
For the last several decades, Lockheed Martin Corporation (NYSE:LMT) has been the partner of choice for most American allies, with several countries looking toward the company’s weapons to bolster their national security. This is a key reason why analysts and investors are optimistic in the stock recovering from its current downturn, driven by heavy losses in certain classified programs and a delay in the rollout of upgrades for the F-35.
Here is what Ariel Focus Fund stated regarding Lockheed Martin Corporation (NYSE:LMT) in its Q4 2024 investor letter:
“Shares of leading global defense contractor Lockheed Martin Corporation (NYSE:LMT) also traded lower returning some of its third quarter gains. Although earnings were solid, investor uncertainty tied to ongoing F-35 contract negotiations and software delays overshadowed the company’s robust order backlog and return of capital to shareholders via share repurchases and dividends. In our view, LMT continues to be well positioned in the defense sector.”
Investor interest in the stock has picked up after a report in Reuters earlier in the month about Lockheed Martin Corporation (NYSE:LMT) planning to unveil a new, low-cost cruise missile priced at $150,000 with a range of 800 kilometers, as the company works to counter Chinese ambitions in the Pacific by offering affordable weaponry.
On March 7, Matthew Akers from Wells Fargo raised the stock’s price target to $476 from $468, with the revision likely stemming from a growing interest in American defense stocks from abroad.
5. HEICO Corporation (NYSE:HEI)
Number of Hedge Fund Holders: 67
HEICO Corporation (NYSE:HEI) is an aerospace and technology company that manufactures jet engines and aircraft parts. It also supports the government through activities such as reverse engineering, manufacturing aircraft engines and parts, and repair and maintenance services.
On March 5, Truist Securities raised HEICO Corporation (NYSE:HEI)’s price target to $294 per share from $282 previously, while maintaining the Buy rating. The adjustment followed the company’s strong results for the first quarter of fiscal 2025, in which it reported an all-time record quarterly net income of $168 million, up 46% year-over-year. Net sales were also up 15% from last year, while EBITDA registered a 22% increase compared to the same period in 2024.
HEICO Corporation (NYSE:HEI)’s robust performance during the quarter was driven by double-digit organic growth within both business segments. The Flight Support Group experienced increased demand across product lines, while the Electronic Technologies Group saw a surge in demand for its defense, space and aerospace products.
HEICO Corporation (NYSE:HEI)’s shares are up by nearly 16% over the past month. Wall Street analysts have a consensus Buy rating for the stock and anticipate a further 6% uptick, on average, in its share price. According to Insider Monkey’s database for Q4 2024, 67 hedge funds held a stake in the company, improving from 57 at the end of the third quarter. It is one of the best defense stocks to buy now.
4. TransDigm Group Incorporated (NYSE:TDG)
Number of Hedge Fund Holders: 69
TransDigm Group Incorporated (NYSE:TDG) manufactures engineered aircraft components for commercial and military aircraft. Recent strategic acquisitions over the past year are shaping the company well for significant increases in future revenue and to further solidify its position in the industry.
On July 31, 2024, it completed the acquisition of Raptor Scientific, a leading provider of complex text and manufacturing solutions for the aerospace and defense markets, for $655 million. Nearly all of its revenue comes from proprietary products.
Earlier in June, TransDigm Group Incorporated (NYSE:TDG) acquired Communications & Power Industries’ Electron Device business for $1.385 billion in cash. It is a leading manufacturer and supplier of electronic components and subsystems for the aerospace and defense industry, with about 70% of its revenue generated from the aftermarket.
TransDigm Group Incorporated (NYSE:TDG)’s financial performance remains strong. On February 4, the company reported results for the first quarter of fiscal 2025. It generated a net income of $493 million, up 29% from last year, driven by a 12% year-over-year surge in net sales. Adjusted EPS stood at $7.83, growing 9% from the prior year’s quarter.
Wall Street analysts are bullish on TransDigm Group Incorporated (NYSE:TDG) with a consensus Buy rating and an average share price upside potential of 9.81%. According to Insider Monkey’s database for Q4 2024, 69 hedge funds held a stake in the company, making it one of the best defense stocks to buy. AltaRock Partners was the largest investor in TDG, with holdings of nearly $1.27 billion, as of December 31, 2024.
3. RTX Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 80
RTX Corporation (NYSE:RTX) is a giant in the global aerospace and defense industry, providing systems and services to commercial, military, and government clients. The company operates through three main businesses: Collins Aerospace, Pratt & Whitney, and Raytheon.
Regular awards of high-value contracts have made RTX a popular stock for investors looking to increase their exposure to the defense industry. According to Insider Monkey’s database for Q4 2024, 80 hedge funds held a stake in the company, up from 72 at the end of the third quarter.
On February 20, RTX Corporation (NYSE:RTX)’s Pratt & Whitney business was awarded a three-year sustainment contract, valued at $1.5 billion, for F119 engines, which power the Air Force’s F-22 fighter jets. Earlier in the year, Raytheon secured a $946 million deal to provide additional Patriot air and missile defense systems to Romania, inclusive of radars, missiles, and control stations.
On March 11, RTX Corporation (NYSE:RTX)’s Collins Aerospace business was approved to begin full rate production of the MAPS Gen II system to be installed on combat ground vehicles of the US Army and Marine Corps. Here is what the company stated on the approval:
“Through close coordination with our customer, we’ve met the modernized fielding requirements for MAPS while reducing production costs. MAPS GEN II is a critical part of the DOD’s modernization goals and will provide the warfighter with trusted access to Assured PNT when they need it most.”
RTX Corporation (NYSE:RTX) had a robust fiscal 2024, with adjusted sales of $80.8 billion, growing 9% year-over-year. Adjusted EPS was logged at $5.73, up 13% from last year. The company returned $3.7 billion of capital to shareholders during the year and headed into fiscal 2025 with a backlog of $218 billion. Wall Street analysts are bullish on RTX with a consensus Buy rating and an average share price upside potential of 7.59%. It is one of the best defense stocks to buy now.
2. GE Aerospace (NYSE:GE)
Number of Hedge Fund Holders: 101
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.
On March 14, the company announced receiving an IDIQ contract worth up to $5 billion 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 latest agreement reflects GE Aerospace (NYSE:GE)’s commitment to America’s defense partnerships and in ensuring operational readiness of the F-15 and F-16 fleets globally.
Earlier in the month, GE Aerospace (NYSE:GE) also said it plans on investing $1 billion in its US facilities to strengthen manufacturing and innovation. The new investment is nearly twice the amount pledged last year, and is set to improve engine safety, quality, and delivery.
On January 23, GE Aerospace (NYSE:GE) reported impressive results for the fourth quarter of fiscal 2024, with earnings topping Wall Street estimates. The company also projected a major profit surge in 2025, which has attracted investor interest.
According to Insider Monkey’s database for Q4 2024, 101 hedge funds held a stake in the company, making it one of the best defense stocks to buy now. Wall Street analysts are also bullish on the stock, with a consensus Buy rating and an average share price upside potential of 4%.
1. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 103
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.
The company’s challenges from 2024 remain unabated this year. The stock has slumped by over 12% in the past month, with new tariffs imposed by the Trump administration further aggravating the situation.
Investor sentiment has also been dented by a federal judge accusing The Boeing Company (NYSE:BA) of prioritizing profit over passenger and aircraft safety, and ruling that the company must face shareholder class action for the 737 MAX 9 blowout incident in January 2024.
During a Fox News broadcast on March 14, Transportation Secretary, Sean Duffy, also stated that The Boeing Company (NYSE:BA) had lost the trust of the American people after the incident and two fatal crashes in 2018 and 2019.
“When you breach the trust of the American people with that safety and with your manufacturing, we’re going to put the screws to you to make sure you change your ways and start doing things right.”
Despite a grim situation, most analysts remain bullish on the stock as they believe The Boeing Company (NYSE:BA) is too big a company to fail and considering its order backlog of $521 billion, the stock is bound to recover once the headwinds are over. In a recent positive development, the company was awarded a $358 million contract to enhance capabilities of the Royal Australian Air Force’s E-7A aircraft.
Overall, The Boeing Company (NYSE:BA) ranks first among the 11 Best American 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 time frame. If you are looking for an AI stock that is more promising than BA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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