We recently published a list of 10 Defense Stocks with the Highest EPS Growth in 5 Years. In this article, we will take a look at where Axon Enterprise, Inc. (NASDAQ:AXON) stands against other stocks with the highest EPS growth during this period.
The world has been embroiled in deadly political and armed conflict over the last few years. Russia’s war on Ukraine has gone beyond three years, while the Middle East is up in flames after Israel launched a full-scale invasion of Gaza against Hamas. According to a report, the number of conflict zones worldwide has increased by nearly two-thirds since 2021.
READ ALSO: 10 Best Performing Defense Stocks So Far in 2025 and 10 Worst Performing Defense Stocks So Far in 2025.
While the human impact of these wars has been tragic, the defense industry has profited by luring investors into buying up stocks. Several of the world’s top contractors saw their shares book all-time highs last year.
A recent report by the International Institute for Strategic Studies (IISS) stated that global defense spending soared to a record high of $2.46 trillion in 2024, amid significant budget increases in Asia, Europe, the Middle East, and North Africa due to deteriorating security environments and threat perceptions. Easing inflation in different parts of the world also allowed countries to invest in and bolster national defense.
Global defense stocks have surged this year as European capitals unlock billions to supercharge their militaries. Several contractors in the region are registering double-digit returns. Asian defense manufacturers, especially in South Korea and India, have also benefited from the splurge.
In contrast, American defense stocks have been subdued this year and missed the global rally due to concerns around government budget cuts and reduced military spending in the future if things settle down with Russia and China. The creation of DOGE has also reshaped investors’ views of the industry.
Despite a shaky start to 2025, most analysts remain optimistic about the sector, with the downside shrinking. They believe that while the world may be heading toward a multi-polar order, it is no less dangerous to decrease the need for deterrence tools.
Investor sentiment has received a boost from two recent events. In March, President Trump unveiled a new next-generation fighter jet, the F-47, to replace the F-22 Raptor. Given the strategic competition with China, he has also announced to resurrect America’s military and commercial shipbuilding industry, which he sees as vital to national security.
With that said, let’s now shift focus on the defense stocks with the highest EPS growth in 5 years.
A technician in a white coat testing an in-car system on a modern military vehicle.
Methodology
For this article, we went through screeners to identify stocks in the aerospace and defense industry that have had positive EPS growth over the last five years. From there, we picked the top 10 defense stocks with the highest EPS growth during this period. Pure-play aerospace companies that do not deal in defense contracts are not part of the list. All data is as of the close of business on Thursday, April 3, 2025.
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).
Axon Enterprise, Inc. (NASDAQ:AXON)
EPS Growth, Past 5 Years: 218.25%
Axon Enterprise, Inc. (NASDAQ:AXON) manufactures weapons and technology for law enforcement agencies, the military, and civilian use. The company integrates cloud software solutions and hardware devices to help enable modern policing, defense, and security.
With a staggering 218% EPS growth over the past 5 years, Axon Enterprise, Inc. (NASDAQ:AXON) is one of the best defense stocks to buy. Investor interest has further strengthened in the company after it reported robust financial results for the fiscal year 2024 in February.
Axon Enterprise, Inc. (NASDAQ:AXON) generated a revenue of $2.1 billion, growing 33% year-over-year, and nearly double from the figure two years ago. The company also marked 12 successive quarters of 25% or above revenue growth. Annual net income stood at $377 million, supporting the non-GAAP net income of $466 million.
According to Insider Monkey’s database, 64 hedge funds held a stake in Axon Enterprise, Inc. (NASDAQ:AXON) at the end of the fourth quarter of 2024, improving from 46 in Q3. Here is what Sands Capital Select Growth Fund stated about AXON being an attractive stock in its Q4 2024 investor letter:
“Axon Enterprise, Inc. (NASDAQ:AXON) is a leading provider of public-safety technology, including body cameras, software, and the TASER electroshock device. Axon’s mission is to “protect life, capture truth, and accelerate justice.” The company is the sole manufacturer of the TASER and is the world’s leading provider of body cameras by market share. Demand for Axon’s safety solutions is both secular and countercyclical, in our view. The company benefits from the secular shift toward safer and more accountable policing, and demand is likely to be durable in recessionary periods, when crime tends to rise and governments tend to increase spending. While its hardware and software can be purchased separately, they are increasingly sold as a bundle, resulting in highly visible and recurring revenue with long-duration contracts. This bundled ecosystem works together to automate, record, and store tamperproof evidence in the cloud. The bundle also benefits from positive flywheel effects because Axon uses anonymized usage data to drive hardware, software, and training improvements, ultimately resulting in an attractive and effective service for users. Over the next decade, we expect hardware to become a smaller part of Axon’s overall business, with the higher margin software component becoming a more meaningful revenue driver.”
Overall, AXON ranks 1st among the 10 Defense Stocks with the Highest EPS Growth in 5 Years. 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. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AXON but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
