We recently published a list of 12 Best Aerospace and Defense Stocks to Buy According to Analysts. In this article, we are going to take a look at where HEICO Corporation (NYSE:HEI-A) stands against other best aerospace and defense stocks to buy according to analysts.
Defense Spending Uncertainty
On February 13, CNBC reported that President Trump’s statement regarding a potential reduction in US defense spending triggered a drop in defense stocks. During a White House event, the President proposed cutting the defense budget in half, stating that there is no need for the United States to spend nearly $1 trillion on the military. He mentioned plans to discuss this idea with China and Russia in future meetings. This sent mixed signals regarding military spending. On the one hand, he has emphasized the need for a strong military and proposed initiatives like the “Iron Dome of America,” a missile defense system. On the other hand, he also suggested significant cuts to defense spending, aligning with broader efforts to reduce government expenditures.
To discuss this, TD Cowen’s Roman Schweizer joined CNBC for an interview on February 14. He noted that setting aside all the mixed signals and uncertainty around the sector, the government would increase defense spending. This will be a result of the reconciliation plan of the Senate and House, however, the magnitude of this increase is still unclear. Schweizer also noted that some members of both the House and Senate are pushing President Trump to increase defense spending to 4% or 5% of GDP. Moreover, US Secretary of Defense, Pete Hegseth, reiterated that US defense should be pegged at 3% of GDP. Schweizer highlighted that this forms an interesting baseline for a potential $40 billion to $60 billion increase in spending over the upcoming years.
Regardless of the uncertainty in the White House regarding increasing or decreasing defense spending, the industry has been redefining itself with the help of technology and AI. On February 21, Morgan Stanley released a report highlighting megatrends for the industry. The report highlights that innovations in unmanned drones, robotics, autonomy, and artificial intelligence are not only modernizing military operations but also influencing how nations allocate and grow their defense budgets. In 2023, global military expenditures reached a record high of $2.4 trillion, marking a 6.8% increase from the previous year, the steepest annual growth since 2009.
Morgan Stanley’s Global Investment Office views this resurgence in defense spending and technological innovation as an opportunity to enhance productivity and stimulate economic growth. They highlighted that the integration of new technologies can create investment opportunities not only in defense contractors but also in related sectors such as supply chains, transportation, manufacturing, energy, and cybersecurity.
Our Methodology
To curate the list of 12 best aerospace and defense stocks to buy according to analysts we used the Finviz stock screener and CNN as our sources. Using the screener we aggregated a list of aerospace and defense stocks for which analysts see more than 30% upside in the next 12 months. After sorting the list by market capitalization, we cross checked the analyst upside from CNN and ranked the stocks in ascending order of this indicator. We have also added the hedge fund sentiment around each stock sourced from Insider Monkey’s Q4 2024 database. Please note that the data was recorded on March 27, 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).
A technician inspecting a commercial jet engine in a specialized testing facility.
HEICO Corporation (NYSE:HEI-A)
Number of Hedge Fund Holders: 67
Analyst Upside Potential: 36.26%
HEICO Corporation (NYSE:HEI-A) is a technology-driven aerospace, industrial, defense, and electronics company that specializes in manufacturing jet engine and aircraft component replacement parts, as well as electronic equipment. The company operates through two main segments including the Flight Support Group and Electronic Technologies Group.
During the fiscal first quarter of 2025, HEICO Corporation (NYSE:HEI-A) reported record-breaking results. The net income increased by 46% year-over-year to $168.0 million, along with the net sales that grew 15% to reach $1.03 billion. The growth was driven by both of its segments as Flight Support Group increased its sales by 15% and the Electronic Technologies Group grew 16% during the same time. Notably, the Flight Support Group marked its eighteenth consecutive quarter of net sales growth. Management remains optimistic about sustained growth across both segments, supported by strong demand for defense products and ongoing acquisition opportunities aimed at expanding market share while maintaining financial discipline. HEICO Corporation (NYSE:HEI-A) is one of the best aerospace and defense stocks to buy according to analysts.
Overall, HEI-A ranks 9th on our list of best aerospace and defense stocks to buy according to analysts. While we acknowledge the potential of HEI-A as an investment, 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 HEI-A but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
