A Republican administration usually points to a good time for defense stocks and the military-industrial complex as a whole. However, the Trump administration has taken a surprising departure from the traditional Republican stance of advocating for ever-increasing military budgets. Instead, Trump has introduced significant shifts in priorities. His administration has pushed for budget cuts at the Pentagon.
Trump wants to cut defense spending by 8% and re-allocate that toward border security and nuclear modernization instead of traditional military programs. The proposed cut would amount to approximately $50 billion in cuts each year and would total around $300 billion in reduced spending by fiscal 2030.
However, that’s unlikely to happen as both Democrats and Republicans in Congress haven’t been cooperating. Similar attempts previously didn’t get through. Regardless, many defense and aerospace companies have been posting great numbers and the stock market has rewarded them accordingly. It’s a good idea to look into the ones investors are piling into this year, as they could also be the winners of the Trump era.
A fighter jet in formation, revealing the prowess of the company’s defense arm.
Methodology
For this article, I screened the top-performing defense stocks year-to-date. Stocks that I have covered recently will be excluded from this list.
I will also mention the number of hedge fund investors in these stocks. Why are we interested in the stocks that hedge funds invest in? 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).
15. RTX Corp (NYSE:RTX)
Number of Hedge Fund Holders In Q4 2024: 80
RTX Corp (NYSE:RTX) is an aerospace and defense company.
The stock is up significantly so far in 2025 as it announced strong 2024 results and a positive outlook for 2025. However, the stock later dropped after President Trump’s comments about potentially cutting defense spending by 50% through negotiations with China and Russia.
Still, it has a record backlog of $218 billion, including $125 billion commercial and $93 billion defense. The company forecasts 2025 sales between $83 billion to $84 billion with 4-6% organic growth.
The consensus price target of $163 implies 31.3% upside.
RTX stock is up 7.32% year-to-date.
14. Smith & Wesson Brands Inc (NASDAQ:SWBI)
Number of Hedge Fund Holders In Q4 2024: 15
Smith & Wesson Brands Inc (NASDAQ:SWBI) is a firearm company.
The stock is up significantly so far in 2025 as it has seen several new product launches. This includes the Bodyguard 380 pistol and lever action rifles, both of whom have driven sales growth.
Net sales reached $129.7 million, up 3.8% year-over-year and 46.8% sequentially. And new products represented 44% of total sales. On top of that, the company’s board authorized a new $50 million share repurchase program.
The consensus price target of $13 implies 16.7% upside.
SWBI stock is up 8.26% year-to-date.
