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.
13. StandardAero Inc (NYSE:SARO)
Number of Hedge Fund Holders In Q4 2024: 35
StandardAero Inc (NYSE:SARO) is an aerospace engine company.
The stock is up significantly so far in 2025 as it secured a significant 15-year agreement with a major Middle East airline for CFM LEAP engine maintenance services, with their San Antonio facility handling comprehensive engine and component repair services for LEAP-1A and LEAP-1B engines.
In addition, Q3 2024 results were quite strong. Revenue increased 13.2% year-over-year to $1,244.6 million, and adjusted EBITDA grew 26% to $168.4 million. The margin also expanded to 13.5%.
Analysts are also optimistic about its Q4 2024 earnings, which are expected to come out on February 26, 2025.
The consensus price target of $35.67 implies 31.87% upside.
SARO stock is up 9.13% year-to-date.
12. Cadre Holdings Inc (NYSE:CDRE)
Number of Hedge Fund Holders In Q4 2024: 12
Cadre Holdings Inc (NYSE:CDRE) makes safety equipment for law enforcement, first responders, and for military uses.
The stock is up significantly so far in 2025 as it announced an agreement to acquire Carr’s Group’s Engineering Division for £75 million in cash, which includes multiple nuclear brands. This division generated £51 million in revenue for fiscal year 2024. The acquisition will expand Cadre’s nuclear safety presence.
Furthermore, Cadre announced a 9% increase in its quarterly dividend to $0.095 per share and raised its annual dividend from $0.35 to $0.38 per share. It also received $590 million in new credit facilities.
The consensus price target of $39.67 implies 13.65% upside.
CDRE stock is up 9.16% year-to-date.
11. Sturm Ruger & Co Inc (NYSE:RGR)
Number of Hedge Fund Holders In Q4 2024: 22
Sturm Ruger & Co Inc (NYSE:RGR) is a firearm manufacturer.
The stock is up significantly so far in 2025 as it reported blockbuster Q4 2024 earnings. Q4 2024 revenue of $145.8 million, beating expectations by $8 million. Earnings per share of $0.62 met analyst expectations and Q4 revenue grew 19% compared to Q4 2023.
Moreover, new product sales accounted for 32% of total firearm sales at $159.3 million, up from 23% or $119.0 million in 2023. It also declared a quarterly dividend of $0.24 per share and entered 2025 with a debt-free balance sheet, along with $105.5 million in cash and short-term investments.
On top of that, Sturm Ruger announced successful inventory management with a reduction of 28,300 units in finished goods and 63,500 units in distributor inventories.
RGR stock is up 11.73% year-to-date.
10. Woodward Inc (NASDAQ:WWD)
Number of Hedge Fund Holders In Q4 2024: 35
Woodward Inc (NASDAQ:WWD) makes energy conversion and control products for aerospace and industrial clients.
The stock is up significantly so far in 2025 after its Q1 FY2025 earnings beat analyst expectations. The company reported earnings per share of $1.35. This beat analyst expectations of $1.14.
Furthermore, net income came in at $87.1 million on revenue of $772.7 million, and the company performed well in the Aerospace segment despite Boeing delivery challenges.
It also reported high aircraft utilization driving commercial and defense aftermarket demand.
Woodward reaffirmed the fiscal year 2025 guidance with adjusted earnings per share range of $5.85-$6.25.
The consensus price target of $197.38 implies 4.97% upside.
WWD stock is up 14.14% year-to-date.
9. Redwire Corp (NYSE:RDW)
Number of Hedge Fund Holders In Q4 2024: 11
Redwire Corp (NYSE:RDW) is a space company.
The stock is up significantly so far in 2025 after it announced a $925 million acquisition of Edge Autonomy, which makes drones for the defense industry. The deal terms include $150 million in cash.
It also includes $775 million in Redwire common stock and is expected to close in Q2 2025. This is expected to result in combined 2025 revenue of $535 million to $605 million and $70 million to $105 million in Adjusted EBITDA.
Also, Redwire announced the redemption of all public warrants. It expects $310 million for all of 2024.
The consensus price target of $18.04 implies 7.7% downside.
RDW stock is up 16.77% year-to-date.
8. Astronics Corp (NASDAQ:ATRO)
Number of Hedge Fund Holders In Q4 2024: 31
Astronics Corp (NASDAQ:ATRO) makes electrical power systems, lighting, avionics, and test systems.
The stock is up significantly so far in 2025 after it announced solid Q4 2024 results and positive 2025 guidance. Astronics announced that its preliminary unaudited revenue for Q4 2024 was between $208 million and $210 million.
This is the upper end of its guidance at an increase of 7% year-over-year. For the full year, revenue grew by 15.5% to $796 million.
The company also provided optimistic revenue guidance for 2025. It projects $820 million to $860 million in revenue, implying approximately 6% growth at the midpoint.
The consensus price target of $17 implies 9.48% downside.
ATRO stock is up 17.70% year-to-date.
7. GE Aerospace (NYSE:GE)
Number of Hedge Fund Holders In Q4 2024: 101
GE Aerospace (NYSE:GE) makes commercial and defense aircraft engines.
The stock is up significantly so far in 2025 as it posted a strong 2025 profit outlook and increased shareholder returns. The company reported surging demand for jet engines and high-margin services amid delays in new aircraft production at Boeing and Airbus.
In addition, it posted a 44% increase in profits from its Commercial Engines and Services in Q4 2024. GE also announced plans to repurchase $7 billion in shares and increase its dividend by 30%.
Its EPS of $1.32 surpassed analyst expectations of $1.05 and it has been landing upgraded analyst price targets over the past year.
The consensus price target of $211.3 implies 1.86% upside.
GE stock is up 25.03% year-to-date.
6. Howmet Aerospace Inc (NYSE:HWM)
Number of Hedge Fund Holders In Q4 2024: 58
Howmet Aerospace Inc (NYSE:HWM) is an aerospace manufacturing company.
The stock is up significantly so far in 2025 due to solid financial performance and upgraded guidance. It reported record revenue and profit for 2024. Full-year revenue grew 12% year-over-year to $7.4 billion, driven by a 20% increase in commercial aerospace sales.
For 2025, Howmet raised its revenue growth guidance to approximately 8%. This was along with a 25% quarterly dividend increase and significant share repurchases.
This ended up driving analyst optimism and the company received a price target increase from Morgan Stanley to $155 from $125.
The consensus price target of $123.3 implies 10.1% downside.
HWM stock is up 25.64% year-to-date.
5. Planet Labs PBC (NYSE:PL)
Number of Hedge Fund Holders In Q4 2024: 19
Planet Labs PBC (NYSE:PL) makes Earth-imaging satellites.
The stock is up significantly so far in 2025 after it secured its largest contract to date with an Asia-Pacific partner for $230 million. This agreement involves building and deploying its Pelican high-resolution satellite fleet and providing the partner with priority access to the data. The deal is expected to add approximately $33 million in annual revenue over seven years.
Moreover, Planet Labs became part of the European Space Agency’s Copernicus Contributing Missions. Multiple analysts have raised their price targets as well.
In Q3 FY2025, Planet reported record revenue of $61.3 million, an 11% year-over-year increase. Gross margins improved significantly, and net losses narrowed from $38 million to $20.1 million compared to Q3 FY2024. The company also maintained a strong cash position of $242 million with no debt.
The consensus price target of $6.27 implies 17.4% upside.
PL stock is up 32.80% year-to-date.
4. Satellogic Inc (NASDAQ:SATL)
Number of Hedge Fund Holders In Q4 2024: 7
Satellogic Inc (NASDAQ:SATL) is a geospatial company that operates satellites for high-res Earth imagery.
The stock is up significantly so far in 2025 after it secured a multi-year agreement with the Brazilian Air Force to provide low-latency satellite imagery. The contract includes access to Satellogic’s NewSat constellation and Aleph platform.
Satellogic also expanded its collaboration with SynMax. Synmax is a satellite data analytics company that is expected to triple the monitoring capacity of oil and natural gas wellheads across North America.
SATL stock is up 33.68% year-to-date.
3. Triumph Group Inc (NYSE:TGI)
Number of Hedge Fund Holders In Q4 2024: 25
Triumph Group Inc (NYSE:TGI) is an aerospace company.
The stock is up significantly so far in 2025 after it announced a definitive agreement to be acquired by private equity firms Warburg Pincus and Berkshire Partners for approximately $3 billion. Shareholders will receive $26.00 per share in cash.
In Q3 FY2025, Triumph posted $315.6 million in net sales, up 11% year-over-year. Adjusted earnings per share (EPS) came in at $0.27 and exceeded analyst expectations of $0.24. It also achieved an adjusted EBITDAP margin of 18% and generated $32.3 million in free cash flow.
The consensus price target of $18.78 implies 25.76% downside.
TGI stock is up 35.42% year-to-date.
2. EHang Holdings Ltd (NASDAQ:EH)
Number of Hedge Fund Holders In Q4 2024: 11
EHang Holdings Ltd (NASDAQ:EH) is a Chinese company that makes autonomous aerial vehicles.
The stock is up significantly so far in 2025 as it unveiled its Urban Air Mobility (UAM) Exhibition Center in Shenzhen. It featured the first automated smart vertiport for its EH216-S aircraft.
In addition, EHang entered into a partnership with Sunriver Group to deploy its EH216-S aircraft for aerial tourism across over 40 tourist attractions in China. Sunriver committed to purchasing 50 units, with an initial order of 5 units.
Plus, EHang reported revenue growth of 347.8% to RMB128.1 million ($18.3 million) in Q3 2024 along with positive operating cash flow for four consecutive quarters and investments exceeding $22 million.
These results were followed by preliminary Q4 figures that exceeded revenue guidance by 20%. EHang also announced a $30 million share repurchase program.
The consensus price target of $24.75 implies 4.95% downside.
EH stock is up 66.48% year-to-date.
1. AMMO Inc (NASDAQ:POWW)
Number of Hedge Fund Holders In Q4 2024: 3
AMMO Inc (NASDAQ:POWW) is a firearms company that also has its own online firearms marketplace.
The stock is up significantly so far in 2025 as it announced the sale of its ammunition manufacturing assets to Olin Winchester for $75 million in cash so it could pivot to its profitable GunBroker.com marketplace. The transaction is expected to close in Q2 2025.
The platform has shown strong user growth (25,000 new users per month) and increased monetization through higher take rates. The $75 million cash injection from the asset sale should boost the platform even more.
The consensus price target of $1.5 implies 17.36% downside.
POWW stock is up 67.73% year-to-date.
While we acknowledge the potential of POWW as an investment, our conviction lies in the belief that some 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 POWW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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