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Global military spending recently climbed to record levels, led by the United States, Europe and Asia.
Defense stocks, backed by longterm government contracts, can offer relatively stable revenue streams.
Some of the best defense stocks to buy now include StandardAero, Woodward and Innovative Aerosystems.
With geopolitical tensions on the rise and defense budgets growing worldwide, aerospace and defense companies are increasingly on investors’ radars. Global military spending recently climbed to record levels, led by the United States, Europe, and key Asia Pacific nations, as governments modernize capabilities across air, sea, cyber and space. From traditional prime contractors to next-generation space systems developers, the defense sector offers a range of opportunities with different risk-reward profiles.
Below you will find a comprehensive look at the best defense stocks, how they behave across market cycles, and strategies for incorporating them into a portfolio.
Are defense stocks a good investment?
Defense firms often operate in oligopolistic markets, backed by long-term government contracts and multiyear procurement programs. This can translate into relatively stable revenue streams compared with purely commercial businesses, especially during economic slowdowns when federal spending tends to be more predictable than consumer demand.
Examples of leading public defense companies:
Lockheed Martin Corporation (LMT) – A top U.S. prime contractor on fighter jets, missiles, and advanced defense systems.
RTX Corporation (RTX) – Parent of Raytheon Technologies with strong positions in missile defense and avionics.
Northrop Grumman Corporation (NOC) – Major systems integrator known for stealth bombers and space systems.
General Dynamics Corporation (GD) – Builds combat vehicles, submarines, and defense electronics.
Boeing Company (BA) – Aerospace and defense manufacturer with significant military contracts.
Intuitive Machines, Inc. (LUNR) – Emerging space technology and services company working with NASA and U.S. national security space programs.
These names represent different segments — from legacy primes to newer space-oriented contractors.
Do defense stocks outperform the market?
Historically, defense equities have:
Delivered competitive long-term returns versus broad indexes like the S&P 500.
Shown resilience during geopolitical shocks when investors rotate toward “stable” government-linked revenue streams.
Benefited from increased defense appropriations and supplemental spending bills.
Still, performance varies by company and period.
Below, we analyze and rank the best defense stocks using a blend of Zacks Rank signals, Style Scores, and fundamental metrics to identify compelling opportunities in today’s market.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
StandardAero is an independent aircraft engine and component MRO provider with military and helicopter exposure alongside commercial fleets. After a record 2025, management guided to growth across end markets in 2026, supported by elevated shop visits, pricing, and productivity gains. High flight hours and tight spare-engine pools tend to pull maintenance forward, and the ramp in newer engine programs can lift mix over time. Scale and long-term contracts can soften the cycle.
Potential Risks
Defense and helicopter demand can be lumpy, and budget or schedule shifts can push maintenance into later periods. Parts availability and turnaround execution are key, and leverage can amplify any margin wobble.
Forecast
Zacks Rank #1 (Strong Buy), with a Growth Score of A and VGM of B, points to favorable forward revisions even though the Momentum Score is F. The chart shows consensus stepping higher into 2026–2027, but price volatility and mixed surprises suggest the market is still testing consistency.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
Woodward makes aerospace actuation and control systems, with defense OEM and aftermarket demand complementing commercial programs. The company is in an upswing where higher production rates, service mix, and disciplined execution are translating into faster sales growth and margin expansion, and it lifted fiscal 2026 guidance after first-quarter outperformance. Long program lives, and rising content per aircraft can support multi-year earnings power, while its industrial segment adds diversification.
Potential Risks
Aerospace supply-chain bottlenecks, quality issues, or labor constraints can turn volume into cost pressure. Any cooling in guidance momentum can trigger a sharp de-rating.
Forecast
A Zacks Rank #1 is a strong revision signal, though Style Scores of F for Value, C for Growth, and D for Momentum are more mixed. The chart shows steadily rising consensus into 2026–2027 and a recent run of positive surprises alongside a powerful price uptrend.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
Innovative sells avionics displays and integration for commercial, business, and military aircraft, giving it niche defense-electronics exposure. As retrofit and upgrade demand improves, incremental orders can flow quickly to profit, and the company exited calendar 2025 with a solid backlog that supports near-term visibility. A clean balance sheet and niche product set also leave room to fund development wins without stretching.
Potential Risks
Orders can be lumpy, and customer concentration is real for a small supplier, so a delayed program award can swing results. After a big price move, any margin wobble or slower bookings could drive sharp multiple compression.
Forecast
With a Zacks Rank #1 and A scores for Growth and Momentum, the signal favors continued estimate strength. The chart shows consensus stepping up into 2026–2027, while surprises skew positive lately; the price spike, however, raises the bar for repeatable beats.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
BWX Technologies is a nuclear components and services provider whose Navy nuclear propulsion work anchors its defense exposure. The company ended 2025 with a sharply higher backlog and initiated 2026 guidance that implies continued earnings and cash-flow growth as multi-year naval and special materials awards ramp. Beyond the core, exposure to nuclear medicine and select commercial nuclear opportunities adds optionality without changing the defense anchor.
Potential Risks
Government programs are budget- and oversight-sensitive, so award timing, contract protests, or cost scrutiny can create lumpiness. Expansion projects and newer commercial initiatives also carry execution risk if returns lag expectations.
Forecast
A Zacks Rank #1 supports the bull case, even though the Style Scores are weak on Value and Momentum. The chart shows consensus trending higher into 2026–2027 and mostly positive surprises, matching the strong price trend, though the elevated level means any slowdown in revisions could hit sentiment quickly.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
ATI produces high-performance metals and components used in jet engines and airframes, with aerospace and defense now its main profit driver. In fiscal Q4 2025, aerospace and defense represented 68% of sales, and the company delivered materially higher full-year operating cash flow, underscoring how the mix shift is making results less cyclical than in the past. Management also provided 2026 guidance, supporting the view that demand for titanium and nickel-based alloys remains firm as build rates rise.
Potential Risks
Results hinge on aircraft production schedules, so destocking, certification delays, or airline weakness can ripple into orders. Complex operations also carry yield, scrap, and delivery risk that can pressure margins quickly.
Forecast
A Zacks Rank #2 (Buy) remains supportive, reinforced by Growth A and VGM B scores. The chart shows estimates stepping higher into 2026–2027 and mostly positive surprises recently, consistent with the sharp rally, but increasing sensitivity to any miss.
The Zacks Rank is a proprietary stock-rating model that uses trends in earnings estimate revisions and earnings-per-share (EPS) surprises to classify stocks into five groups: #1 (Strong Buy), #2 (Buy), #3 (Hold), #4 (Sell) and #5 (Strong Sell). The Zacks Rank is calculated through four primary factors related to earnings estimates: analysts' consensus on earnings estimate revisions, the magnitude of revision change, the upside potential and estimate surprise (or the degree in which earnings per share deviated from the previous quarter).
Zacks builds the data from 3,000 analysts at over 150 different brokerage firms. The average yearly gain for Zacks Rank #1 (Strong Buy) stocks is +23.62% per year from January, 1988, through June 2, 2025.
Selections for Best Defense Stocks are based on the current top ranking stocks on Zacks Indicator Score, Style Scores and fundamentals. All stocks have a daily trading volume of at least 100,000 shares and has a stock price of at least $5. All information is current as of market open, April 1, 2026.
General questions about defense stocks
What are defense stocks?
Defense stocks are shares of companies that develop, manufacture, and maintain military equipment, weapons systems, aircraft, cybersecurity solutions, and space infrastructure. Many balance government contracts with commercial operations.
What are the benefits of investing in defense stocks?
Long government contract visibility: Multi-year deals provide predictable revenue.
High barriers to entry: Regulatory and technical requirements limit competition.
Dividend potential: Some established contractors pay steady dividends.
Strategic importance: Defense spending tends to continue even during economic slowdowns.
Why do defense stocks go up during wars or conflicts?
Periods of heightened conflict often signal future increases in military procurement, which can lead to higher demand for weapons systems, logistics support, and modernization programs.
How does government spending affect defense stocks?
Defense budgets are a primary revenue driver. In the U.S., annual appropriations well above $800 billion in recent years support sustained demand for existing and next-generation systems.
Contract awards, budget extensions, and supplemental funding directly add to order backlogs.
Are defense stocks recession-proof?
Defense equities are often considered defensive because government contracts are less sensitive to consumer demand cycles. During downturns, primes like Lockheed Martin and General Dynamics have often shown smaller drawdowns than highly cyclical groups, benefiting from ongoing military spending. However, they are still equities and can decline during broad market downturns.
Which defense stocks perform best during inflation?
Companies with strong pricing power or contracts with cost-inflation adjustments tend to weather inflation better. Digital solutions, avionics, and advanced systems providers often have more margin resilience than heavy industrial manufacturers.
Can defense stocks be held forever?
Some investors hold major primes indefinitely due to stable cash flows and dividends. However, long-term technological shifts and defense policy priorities should prompt periodic portfolio review.
Are defense stocks ethical investments?
Opinions vary. Some investors avoid defense due to ESG concerns, while others view national security as a necessary public good. Investment suitability depends on personal values.
Defense stocks: Comparative and Risk Evaluation
Defense stocks vs. defense ETFs: Which is better?
Individual stocks offer company-specific upside but carry higher singular risk. Defense-oriented ETFs like the iShares U.S. Aerospace & Defense ETF (ITA) or SPDR S&P Aerospace & Defense ETF (XAR) provide diversified exposure across contractors.
Are defense stocks risky?
Key risks include:
Budget cuts or changes in procurement priorities.
Delays or cancellations of major programs.
Export restrictions and geopolitical policy shifts.
Smaller or niche players often experience greater volatility than large primes.
How dependent are defense companies on government contracts?
Many defense firms derive a significant portion of revenue from government orders. Primes like Lockheed Martin or Northrop Grumman often see more than half of their revenues tied to defense budgets.
Emerging companies like Intuitive Machines also work with NASA and the Department of Defense for space and communications services.
Do defense stocks do well in bear markets?
Defense names sometimes outperform more cyclical sectors because their sales are backed by government spending. But they still may decline in broad market selloffs.
Should defense stocks be part of a diversified portfolio?
Including defense stocks can add diversification benefits — particularly exposure to government-linked revenue streams — but concentration risk should be managed with balance across other industries.
Defense stocks strategies and portfolio
How to select defense stocks
Consider:
Contract backlog and visibility.
Balance-sheet health.
Dividend track record and payout ratio.
Exposure to next-generation technologies (hypersonics, AI, space).
International sales mix.
Which defense stocks perform best during inflation?
Look for firms with adaptable pricing terms in contracts and strong margins, such as avionics and systems integrators.
When should I sell defense stocks?
Consider selling when:
Valuations become extended relative to fundamentals.
Major programs are canceled or reduced.
Strategic focus shifts away from core growth areas.
Can defense stocks be held forever?
Long-term holding can make sense for stable, dividend-paying defense giants, but technological disruption and budget evolutions necessitate regular reassessment.
Defense stocks alternatives
If you want exposure to security themes without individual defense equities, alternatives include:
Broad industrial or technology ETFs with defense allocations.
International aerospace firms.
Cybersecurity companies supporting military and government networks.
Space infrastructure players like Intuitive Machines, which bridge commercial exploration and national security roles.
Bottom line
The best defense stocks combine government-linked demand with innovation and balance-sheet strength. Large primes like Lockheed Martin, RTX, Northrop Grumman, and General Dynamics anchor many portfolios, while emerging space-defense companies such as Intuitive Machines offer higher growth potential.
Balancing diversification, valuation discipline, and strategic themes — from traditional weapons systems to space-enabled defense infrastructure — can help investors navigate this complex sector.
View the Zacks #1 Rank List
Strong Buy 
