This article looks at the defense stocks that are gaining this week.
The Ukraine crisis has taken an unexpected turn following a heated exchange at the Oval Office between Ukrainian President Volodymyr Zelensky and US Vice President J.D. Vance on Friday, which ended with President Trump berating the visiting leader. Defense stocks wobbled after the contentious meeting as investors anticipated the US-Ukraine minerals deal to be signed.
READ ALSO: 10 Best Large Cap Defense Stocks to Buy Now and Why These 15 Defense Stocks Are Skyrocketing So Far In 2025.
The defense sector in the US has so far struggled under Trump’s second term as president, amid mixed statements on military expenditure throughout his campaign and the early days of the new stint. Shares fell sharply on February 13 after the US president suggested the country could rapidly cut military spending in the future.
The creation of DOGE is also reshaping investors’ views of the sector. According to a Financial Times report on February 24, shares of the six largest American defense companies have fallen 4% since Trump’s return to the White House. In contrast, Europe’s top defense stocks have risen by nearly 40% over the same period.
European defense stocks have rallied over the past two weeks as governments faced pressures to increase military expenditure. Several stocks recorded double-digit growth on Monday, March 3, a day after the European Summit in London where leaders from the EU and NATO met to express their support for Ukraine, following the recent Zelenskyy-Trump spat.
The momentum has further picked up after a conservative victory in Germany, signaling the shift to the right in Berlin. A Reuters report on Sunday stated that parties in talks to form the country’s next government are already considering setting up a defense fund.
Peter Schaffrik, Global Macro Strategist, at RBC Capital Markets stated the following on the ongoing situation:
“It is an inflection point and Europe realises it needs to do the heavy lifting. The German elections have opened the door for more spending. The whole Zelenskiy-Trump meltdown has fast forwarded everything.”
Let’s now head over to the list of defense stocks that are gaining this week. Please note that the stocks listed are based on one week’s performance. Our analysis does not reflect the prospects of the company. Their share price could go high or low in the future, depending on the external market conditions, industry-specific challenges, and the company’s capabilities. Additional research and caution are advised before making investment decisions.
Methodology
For this article, we went through screeners to see how stocks in the aerospace and defense industry performed over the past week. From there, we picked the top 10 stocks with the highest percentage gains in share price during this period. All data is as of the close of business on Monday, March 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).
10. TransDigm Group Incorporated (NYSE:TDG)
Weekly Gains: 4.40%
TransDigm Group Incorporated (NYSE:TDG) is an aerospace company that manufactures engineered aircraft components for commercial and military aircraft. It is among the defense stocks that are gaining this week.
On February 24, UBS upgraded the stock’s rating to Buy from Neutral, citing stabilised aftermarket growth, increased capital deployment, and margin expansion. Since then, the company’s shares have risen by 4.40%.
TransDigm Group Incorporated (NYSE:TDG) made notable strategic acquisitions last year, which included Raptor Scientific, and Communications & Power Industries’ Electron Device business. These are expected to add significant future revenue for the company.
TransDigm Group Incorporated (NYSE:TDG)’s financial position remains robust. During Q1 2025, it reported a net income of $493 million, up 29% year-over-year. This was driven by a 12% increase in net sales from last year. Adjusted EPS stood at $7.83, growing 9% from the prior year’s quarter.
9. Axon Enterprise, Inc. (NASDAQ:AXON)
Weekly Gains: 5.21%
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.
The stock surged last week after the company reported higher-than-expected earnings for the fourth quarter of fiscal 2024 on February 25. Axon Enterprise, Inc. (NASDAQ:AXON)’s quarterly revenue was $575 million, up 34% from the prior year’s period. This marked the company’s 12th successive quarter of 25%+ revenue growth.
For the full year, Axon Enterprise, Inc. (NASDAQ:AXON)’s revenue grew 33% to $2.1 billion. This is nearly double the figure reported two years ago. Following the results, several analysts reiterated their Buy and Strong Buy ratings for the stock, while raising their price targets, which reflected the bullish sentiment around the company.
8. Northrop Grumman Corporation (NYSE:NOC)
Weekly Gains: 5.22%
Northrop Grumman Corporation (NYSE:NOC) is one of the largest defense contractors in the world. The stock has been making impressive gains over the last couple of weeks, following the announcement of critical high-value contracts.
On February 20, Northrop Grumman Corporation (NYSE:NOC) signed a Memorandum of Understanding with Hanwha Systems to produce ALMDS hardware components for South Korea’s Mine Countermeasures Helicopter (KMCH) program.
Earlier in the month, Northrop Grumman Corporation (NYSE:NOC) was also awarded two contracts worth $1.4 billion to modernize the air and missile defense capabilities of the United States and Poland.
The company’s shares are up 5.22% over the past week. The stock wobbled after the Trump-Zelensky spat on Friday, but gained 3% on Monday to recover.
7. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)
Weekly Gains: 6.64%
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) develops and fields transformative and affordable products and platforms for national security needs. It is involved in various technological areas, such as unmanned systems, C5ISR, satellite communications, warfighter training, and combat systems.
During its Q4 2024 earnings call on February 26, the company announced a 9.1% organic growth in revenue for the full year. Another key highlight was over $45 million in cash flow from operations generated during the fourth quarter. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) also beat quarterly profit estimates and reported impressive book-to-bill ratios for Q4 and the full year.
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) expects an organic revenue growth of 10% in fiscal 2025, and between 13%-15% for 2026. While the stock has had a monthly fall of nearly 22%, it has shown signs of recovery over the past week, with gains of 6.64%, helped by strong quarterly results.
6. RTX Corporation (NYSE:RTX)
Weekly Gains: 6.70%
RTX Corporation (NYSE:RTX) is an aerospace and defense company that provides advanced systems and services to commercial, military, and government clients. It is among the defense stocks that are gaining this week.
On February 28, the company announced that its Collins Aerospace business had successfully tested a demonstrator of the Enhanced Power and Cooling System (EPACS), which will offer increased cooling to enhance capabilities of the F-35. RTX Corporation (NYSE:RTX) is confident that the new technology will rival Honeywell as the supplier of a critical onboard system for the stealth fighter.
RTX Corporation (NYSE:RTX) also recently announced the successful flight testing completion of the first-ever AI/ML-powered Radar Warning Receiver for a fourth-generation aircraft. The new technology will enhance aircrew survivability and facilitate the deployment of AI/ML capabilities.
The stock has risen 6.70% over the past week, with year-to-date returns of 15.65%.
5. V2X, Inc. (NYSE:VVX)
Weekly Gains: 8.92%
V2X, Inc. (NYSE:VVX) is a leading provider of critical mission solutions and support services to defense clients in over 50 countries and territories.
On February 24, V2X, Inc. (NYSE:VVX) reported a record revenue of $1.16 billion for the fourth quarter of fiscal 2024, representing an 11% year-over-year growth. The strong performance was driven by positive growth across all geographies, most notably the Indo-Pacific region. Adjusted net income stood at $42.7 million, up 10% from last year.
Following the announcement of Q4 results, Citizens Capital Markets and Raymond James maintained their Buy rating for the stock. Investor sentiment was further strengthened after the company was awarded a $100 million contract by the FBI last week to provide aviation maintenance and support services.
V2X, Inc. (NYSE:VVX) is among the defense stocks that are gaining this week, with returns of nearly 9% during the period.
4. Elbit Systems Ltd. (NASDAQ:ESLT)
Weekly Gains: 12.45%
Elbit Systems Ltd. (NASDAQ:ESLT) is an Israel-based defense technology company. It is among the defense stocks that are gaining this week.
On March 3, the stock price reached an all-time high of $336 before closing at $334.60 per share. Elbit Systems Ltd. (NASDAQ:ESLT) is up nearly 30% year-to-date amid new contracts and solid financial performance.
In November last year, the company was awarded contracts worth $335 million to supply defense systems, including rocket launchers and unmanned aircraft, to a European country. More recently, in February, the Moroccan military reportedly signed an agreement with Elbit Systems Ltd. (NASDAQ:ESLT) for the purchase of self-propelled artillery.
The company is set to announce financial results for the fourth quarter of fiscal 2024 later this month, which investors are looking forward to with enthusiasm. The stock gained by over 12% last week in anticipation of the quarterly results.
3. Karman Holdings Inc. (NYSE:KRMN)
Weekly Gains: 13.78%
Karman Holdings Inc. (NYSE:KRMN) specializes in the manufacturing and sale of mission-critical systems for missile, space, and defense programs. It debuted on the NYSE on February 13 and shot up from its initial public offering price of $22 per share to $30.05 on the first day of trading.
The stock has been volatile since then, going down for a few days before picking up again. It registered gains of 13.78% over the past week, as of the close of the day on March 3. The overall prospects for Karman Holdings Inc. (NYSE:KRMN) look encouraging, given the high expectations among investors around space stocks under the Trump administration.
Moreover, last month the US president signed an executive order to mandate the process of building an ‘American Iron Dome’, which presents an opportunity for companies like Karman Holdings Inc. (NYSE:KRMN) to benefit considering its expertise in areas like hypersonic missile defense.
2. HEICO Corporation (NYSE:HEI)
Weekly Gains: 15.80%
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.
The stock has seen a 15.80% surge over the past week as strong results for the first quarter of fiscal 2025 impressed investors. HEICO Corporation (NYSE:HEI) reported a 46% year-over-year increase in net income to a record $168 million. Net sales also grew 15% from last year, while operating income was up 26%.
Wall Street analysts are bullish on HEICO Corporation (NYSE:HEI) with a consensus Buy rating. It is among the defense stocks that are gaining this week.
1. Embraer S.A. (NYSE:ERJ)
Weekly Gains: 20.27%
Embraer S.A. (NYSE:ERJ) is a Brazil-based jet manufacturer that produces aircraft for commercial and executive aviation and defense purposes. It tops the charts for defense stocks that are gaining this week, with returns of over 20% during the period.
Last month, the company signed a $7 billion agreement with Flexjet to supply 182 aircraft and 30 options. Later in the month, Japan’s ANA also placed an order for 15 Embraer S.A. (NYSE:ERJ) E190-E2 planes to support its domestic operations.
On February 27, Embraer S.A. (NYSE:ERJ) declared robust results for the fourth quarter and full year 2024. It generated a revenue of $2.3 billion in Q4, up 17% from last year. Full year revenue stood at $6.4 billion, the highest ever in the company’s history. A key highlight was a 40% increase in Defense & Security revenue compared to last year.
Adjusted EBIT for Q4 was $265 million, with a margin of 11.5%. For 2024, the company generated $780 million with an 11.1% margin. Embraer S.A. (NYSE:ERJ) ended the year with a record order backlog of $26.3 billion.
Overall, Embraer S.A. (NYSE:ERJ) ranks first among the defense stocks that are gaining this week. 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 ERJ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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