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3 Aerospace-Defense Stocks to Buy on Strong Defense & Air Travel Boom
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The Zacks Aerospace-Defense industry is benefiting from rising geopolitical tensions, which are driving higher defense spending and long-term contracts, ensuring stable and predictable revenue streams. At the same time, strong growth in global air travel demand, as projected by the International Air Transport Association, is creating new opportunities for aerospace players. However, the industry continues to face headwinds from persistent supply-chain disruptions, delayed production, and constraints on fully meeting growing demand in the near term. The leading companies in the aerospace-defense industry that you might want to keep an eye on are Lockheed Martin (LMT - Free Report) , Northrop Grumman (NOC - Free Report) and Textron (TXT - Free Report) .
About the Industry
The Zacks Aerospace-Defense industry comprises companies that primarily design and manufacture heavy-built products like commercial as well as military jets and helicopters, tankers and other combat vehicles, missiles, combatant ships as well as auxiliary ships, submarines, bombs, guns, space transportation vehicles, military satellites and a few more. The industry also includes cyber security players that offer information technology services and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) solutions. A portion of its revenues comes from defense contractors offering spare parts, aircraft modification, ship repair and overhaul services, and supply-chain management services.
3 Major Trends in the Aerospace-Defense Industry
Surge in Defense Spending & Geopolitical Tensions: The rise in geopolitical tensions often leads to increased military spending, which typically translates into larger contract awards and multi-year agreements. These contracts may include not only the supply of new equipment but also maintenance, upgrades, training, and logistical support, thereby creating recurring revenue streams. Combined with rising defense budgets, this strengthens cash flow stability and enhances long-term growth prospects. In January 2026, U.S. President Donald Trump proposed a significant increase in U.S. defense spending, targeting annual military outlays of about $1.5 trillion by 2027. This environment benefits defense contractors by providing stable and predictable revenues, which in turn attracts investors.
Air Traffic View Boosts Opportunities: According to a report published in March 2026 by the International Air Transport Association (“IATA”), global air passenger demand is expected to more than double by 2050, growing at a compound annual growth rate (CAGR) of 3.1% to reach 20.8 trillion Revenue Passenger Kilometers (RPKs). Under the mid-range scenario, passenger traffic is projected to increase from 9 trillion RPKs in 2024 to 20.8 trillion by 2050, while high and low scenarios range from 21.9 trillion to 19.5 trillion RPKs. Defense companies, especially those tied to aerospace manufacturing and technology, benefit through technological advances and improved production economics.
Supply-Chain Issues Continue to Act as a Headwind: The Aerospace and Defense industry continues to face headwinds from supply-chain disruptions that began during the pandemic, caused by reduced aircraft demand and global movement restrictions. According to IATA, these supply-chain constraints will restrict airlines from reaching their full growth potential and slow progress toward reducing CO2 emissions. IATA has highlighted that limited aircraft availability and labor shortages remain key supply-side challenges, while broader disruptions continue to delay the timely production and delivery of essential systems. Shortages of critical inputs, such as semiconductors, specialty metals and electronic components, can delay manufacturing processes and extend project timelines. Heavy dependence on globally sourced materials further exposes the sector to geopolitical conflicts, trade barriers and logistical constraints. As a result, costs tend to rise, operational efficiency declines and the ability to rapidly ramp up production during periods of urgent demand is compromised, affecting overall defense preparedness. Smaller suppliers have been hit the hardest, and ongoing supply-chain constraints are expected to continue limiting industry growth in the near term despite broader economic recovery.
Zacks Industry Rank Reflects Bright Outlook
The Zacks Aerospace-Defense industry is housed within the broader Zacks Aerospace sector. It currently carries a Zacks Industry Rank #64, which places it in the top 26% of more than 243 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few aerospace-defense stocks that you may want to add to your portfolio, let’s take a look at the industry’s recent stock market performance and valuation picture.
Industry Lags S&P 500 & Sector
The Aerospace-Defense industry has underperformed the Zacks S&P 500 composite and its sector over the past year. The stocks in this industry have collectively surged 30.1%, while the Zacks Aerospace sector has soared 32.1% during the said time frame. The Zacks S&P 500 composite has gained 31.5%.
One-Year Price Performance
Industry's Current Valuation
On the basis of trailing 12-month EV/Sales, which is used for valuing capital-intensive stocks like aerospace-defense, the industry is currently trading at 3.05X compared with the S&P 500’s 5.59X and the sector’s 3.42X.
Over the past five years, the industry has traded as high as 3.36X, as low as 1.98X and at the median of 2.69X.
EV-Sales Ratio TTM
3 Aerospace-Defense Stocks to Buy
Lockheed Martin: Headquartered in Bethesda, Maryland, LMT is one of the largest defense contractors in the world. Its main areas of focus are defense, space, intelligence, homeland security and information technology, including cyber security. On April 10, 2026, Lockheed Martin was awarded a multibillion-dollar contract by the U.S. government to continue the accelerated production of its PAC-3 Missile Segment Enhancement (“MSE”) system. The $4.7 billion undefinitized contract action (UCA) allows the company to ramp up manufacturing and deliver a record number of combat-proven interceptors to support both U.S. and allied forces within the year.
The Zacks Consensus Estimate for LMT’s 2026 sales calls for a 5.5% improvement year over year. The Zacks Consensus Estimate for 2026 earnings per share (EPS) indicates an increase of 29.5% year over year. It currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: LMT
Northrop Grumman: Headquartered in Falls Church, VA, this global security company supplies a broad array of products like space systems, military aircraft, missile defense, advanced weapons and long-range fire capabilities, mission systems, networking and communications, strategic deterrence systems, and breakthrough technologies, such as advanced computing, microelectronics and cyber. On April 11, 2026 Northrop Grumman launched its second Cygnus XL spacecraft aboard a SpaceX Falcon 9 rocket from Space Launch Complex 40 at Cape Canaveral Space Force Station, marking continued momentum in the company’s commercial resupply and logistics services.
The Zacks Consensus Estimate for NOC’s 2026 sales calls for an increase of 4.6% year over year. The Zacks Consensus Estimate for 2026 EPS indicates an improvement of 6.7% year over year. It currently has a Zacks Rank #2.
Price & Consensus: NOC
Textron: Headquartered in Westminster Street, Providence, RI, the company manufactures aircraft, automotive engine components and industrial tools. It also offers solutions and services for aircraft, fastening systems, and industrial products and components. On April 13, 2026, Textron Aviation Defense was awarded a five-year U.S. government contract worth over $150 million to provide engineering and program management support for the Beechcraft T-6 Texan II fleet used by the Air Force, Navy and Army. The contract extends ongoing support work, including maintenance, repairs, and system upgrades, for more than 700 aircraft, with the total potential contract value rising to about $510 million.
The Zacks Consensus Estimate for TXT’s 2026 sales calls for an increase of 4.7% year over year. The Zacks Consensus Estimate for 2026 EPS indicates a rise of 7.4% year over year. It currently has a Zacks Rank #2.
Price & Consensus: TXT
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3 Aerospace-Defense Stocks to Buy on Strong Defense & Air Travel Boom
The Zacks Aerospace-Defense industry is benefiting from rising geopolitical tensions, which are driving higher defense spending and long-term contracts, ensuring stable and predictable revenue streams. At the same time, strong growth in global air travel demand, as projected by the International Air Transport Association, is creating new opportunities for aerospace players. However, the industry continues to face headwinds from persistent supply-chain disruptions, delayed production, and constraints on fully meeting growing demand in the near term. The leading companies in the aerospace-defense industry that you might want to keep an eye on are Lockheed Martin (LMT - Free Report) , Northrop Grumman (NOC - Free Report) and Textron (TXT - Free Report) .
About the Industry
The Zacks Aerospace-Defense industry comprises companies that primarily design and manufacture heavy-built products like commercial as well as military jets and helicopters, tankers and other combat vehicles, missiles, combatant ships as well as auxiliary ships, submarines, bombs, guns, space transportation vehicles, military satellites and a few more. The industry also includes cyber security players that offer information technology services and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) solutions. A portion of its revenues comes from defense contractors offering spare parts, aircraft modification, ship repair and overhaul services, and supply-chain management services.
3 Major Trends in the Aerospace-Defense Industry
Surge in Defense Spending & Geopolitical Tensions: The rise in geopolitical tensions often leads to increased military spending, which typically translates into larger contract awards and multi-year agreements. These contracts may include not only the supply of new equipment but also maintenance, upgrades, training, and logistical support, thereby creating recurring revenue streams. Combined with rising defense budgets, this strengthens cash flow stability and enhances long-term growth prospects. In January 2026, U.S. President Donald Trump proposed a significant increase in U.S. defense spending, targeting annual military outlays of about $1.5 trillion by 2027. This environment benefits defense contractors by providing stable and predictable revenues, which in turn attracts investors.
Air Traffic View Boosts Opportunities: According to a report published in March 2026 by the International Air Transport Association (“IATA”), global air passenger demand is expected to more than double by 2050, growing at a compound annual growth rate (CAGR) of 3.1% to reach 20.8 trillion Revenue Passenger Kilometers (RPKs). Under the mid-range scenario, passenger traffic is projected to increase from 9 trillion RPKs in 2024 to 20.8 trillion by 2050, while high and low scenarios range from 21.9 trillion to 19.5 trillion RPKs. Defense companies, especially those tied to aerospace manufacturing and technology, benefit through technological advances and improved production economics.
Supply-Chain Issues Continue to Act as a Headwind: The Aerospace and Defense industry continues to face headwinds from supply-chain disruptions that began during the pandemic, caused by reduced aircraft demand and global movement restrictions. According to IATA, these supply-chain constraints will restrict airlines from reaching their full growth potential and slow progress toward reducing CO2 emissions. IATA has highlighted that limited aircraft availability and labor shortages remain key supply-side challenges, while broader disruptions continue to delay the timely production and delivery of essential systems. Shortages of critical inputs, such as semiconductors, specialty metals and electronic components, can delay manufacturing processes and extend project timelines. Heavy dependence on globally sourced materials further exposes the sector to geopolitical conflicts, trade barriers and logistical constraints. As a result, costs tend to rise, operational efficiency declines and the ability to rapidly ramp up production during periods of urgent demand is compromised, affecting overall defense preparedness. Smaller suppliers have been hit the hardest, and ongoing supply-chain constraints are expected to continue limiting industry growth in the near term despite broader economic recovery.
Zacks Industry Rank Reflects Bright Outlook
The Zacks Aerospace-Defense industry is housed within the broader Zacks Aerospace sector. It currently carries a Zacks Industry Rank #64, which places it in the top 26% of more than 243 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few aerospace-defense stocks that you may want to add to your portfolio, let’s take a look at the industry’s recent stock market performance and valuation picture.
Industry Lags S&P 500 & Sector
The Aerospace-Defense industry has underperformed the Zacks S&P 500 composite and its sector over the past year. The stocks in this industry have collectively surged 30.1%, while the Zacks Aerospace sector has soared 32.1% during the said time frame. The Zacks S&P 500 composite has gained 31.5%.
One-Year Price Performance
Industry's Current Valuation
On the basis of trailing 12-month EV/Sales, which is used for valuing capital-intensive stocks like aerospace-defense, the industry is currently trading at 3.05X compared with the S&P 500’s 5.59X and the sector’s 3.42X.
Over the past five years, the industry has traded as high as 3.36X, as low as 1.98X and at the median of 2.69X.
EV-Sales Ratio TTM
3 Aerospace-Defense Stocks to Buy
Lockheed Martin: Headquartered in Bethesda, Maryland, LMT is one of the largest defense contractors in the world. Its main areas of focus are defense, space, intelligence, homeland security and information technology, including cyber security. On April 10, 2026, Lockheed Martin was awarded a multibillion-dollar contract by the U.S. government to continue the accelerated production of its PAC-3 Missile Segment Enhancement (“MSE”) system. The $4.7 billion undefinitized contract action (UCA) allows the company to ramp up manufacturing and deliver a record number of combat-proven interceptors to support both U.S. and allied forces within the year.
The Zacks Consensus Estimate for LMT’s 2026 sales calls for a 5.5% improvement year over year. The Zacks Consensus Estimate for 2026 earnings per share (EPS) indicates an increase of 29.5% year over year. It currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: LMT
Northrop Grumman: Headquartered in Falls Church, VA, this global security company supplies a broad array of products like space systems, military aircraft, missile defense, advanced weapons and long-range fire capabilities, mission systems, networking and communications, strategic deterrence systems, and breakthrough technologies, such as advanced computing, microelectronics and cyber. On April 11, 2026 Northrop Grumman launched its second Cygnus XL spacecraft aboard a SpaceX Falcon 9 rocket from Space Launch Complex 40 at Cape Canaveral Space Force Station, marking continued momentum in the company’s commercial resupply and logistics services.
The Zacks Consensus Estimate for NOC’s 2026 sales calls for an increase of 4.6% year over year. The Zacks Consensus Estimate for 2026 EPS indicates an improvement of 6.7% year over year. It currently has a Zacks Rank #2.
Price & Consensus: NOC
Textron: Headquartered in Westminster Street, Providence, RI, the company manufactures aircraft, automotive engine components and industrial tools. It also offers solutions and services for aircraft, fastening systems, and industrial products and components. On April 13, 2026, Textron Aviation Defense was awarded a five-year U.S. government contract worth over $150 million to provide engineering and program management support for the Beechcraft T-6 Texan II fleet used by the Air Force, Navy and Army. The contract extends ongoing support work, including maintenance, repairs, and system upgrades, for more than 700 aircraft, with the total potential contract value rising to about $510 million.
The Zacks Consensus Estimate for TXT’s 2026 sales calls for an increase of 4.7% year over year. The Zacks Consensus Estimate for 2026 EPS indicates a rise of 7.4% year over year. It currently has a Zacks Rank #2.
Price & Consensus: TXT