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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 Astronics, BWX Technologies and Woodward.
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.
Astronics supplies cockpit, cabin, power, and test systems for commercial aircraft and U.S. defense platforms, linking results to aerospace production and readiness spending. In the latest reported quarter, demand drove record quarterly sales, operating margin expanded on volume, pricing, and mix, and operating cash flow was strong as efficiency programs took hold. Management cited record backlog and maintained 2026 revenue guidance, with the Bühler Motor Aviation deal adding more seat-actuation content.
Potential Risks
OEM build-rate swings, defense timing, or supplier disruptions can quickly compress margins, while integration costs, customer concentration, and program-specific issues may further intensify volatility.
Forecast
A Zacks Rank #1 (Strong Buy) with a Style Score of A for Growth signals positive estimate revisions despite a D Value and F Momentum profile. The Price, Consensus & EPS Surprise chart shows steadily rising forward EPS lines into 2026–2027 and mostly positive surprises since 2024, consistent with the stock’s re-rating as expectations climb.
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 manufactures nuclear components and provides services to the U.S. Navy and other government customers, with increasing exposure to commercial nuclear and medical isotopes. Structural tailwinds include defense modernization and renewed interest in nuclear capacity for grid reliability. In its latest report, BWXT beat expectations, posted a 50% year-over-year backlog jump as acquisitions and program wins flowed through, and laid out higher 2026 targets, underscoring multi-year visibility.
Potential Risks
Government programs are long-cycle and execution-heavy; schedule slips, cost overruns, or procurement shifts can hit margins. After a steep run, valuation risk rises if growth normalizes or nuclear sentiment cools.
Forecast
Zacks Rank #1 and a B Growth score suggest revisions remain supportive, while an F Value score warns expectations are already rich. The chart shows upward-sloping 2026–2027 EPS lines and frequent positive surprises, consistent with momentum, yet future upside likely depends on continued estimate raises.
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 builds control systems and actuation for aircraft engines and industrial turbines, with defense content across fighters, rotorcraft, and military transport propulsion. The long-cycle aerospace ramp and aftermarket strength are supporting sustained volume, while its Industrial segment adds exposure to power-generation and energy-transition spending. The latest quarter showed broad-based acceleration and a higher full-year outlook, confirming improving execution. Woodward recently agreed to acquire Valve Research & Manufacturing, broadening its aerospace controls portfolio.
Potential Risks
WWD is exposed to supply-chain constraints, OEM schedule changes, and periodic industrial order swings. A premium multiple can compress quickly if production bottlenecks reappear or if margin expansion stalls.
Forecast
With a Zacks Rank #1, revisions are skewing positive, while a C Growth score and weak Value and Momentum scores of F imply the move may not be linear. On the chart, consensus EPS steps higher into 2026–2027 and surprises skew positive since 2023, matching the stock’s uptrend as estimates ratchet upward.
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.
Embraer sells regional and business jets and is a defense aircraft supplier via the KC-390 transport and A-29 programs. A broad backlog, expanding services revenue, and European KC-390 adoption support multi-year demand, not just a single delivery quarter. The latest results highlighted record 2025 revenue, strong Defense & Security growth, and 2026 guidance that implies continued scale benefits as production normalizes.
Potential Risks
Aircraft programs are execution-sensitive: supply-chain constraints, certification, or customer acceptance timing can shift deliveries and margins. Currency swings and any slowdown in airline or business-jet demand could also pressure sentiment after the stock’s sharp move.
Forecast
Zacks Rank #1 is a constructive revision signal, but a weak Growth score of F and only a B Momentum score argue for selectivity. The chart shows a clear dip in 2026 consensus even as recent quarters delivered mostly positive surprises, suggesting the next leg depends on rebuilding estimates, not just beating them.
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.
GE Aerospace is a jet-engine and services powerhouse with a large military installed base, tying it to defense readiness and the commercial maintenance cycle. A roughly $190 billion backlog and ongoing U.S. capacity investments support a multi-year “supercycle” thesis as airlines and militaries modernize fleets. The latest results extended that momentum with sharply higher orders and strong cash generation into 2026.
Potential Risks
Supply-chain bottlenecks remain the key swing factor for deliveries and shop visits, and tariff or trade-policy shifts can add costs that must be offset with pricing and productivity. After a big run, multiple compressions are a risk if execution slips.
Forecast
A Zacks Rank #2 (Buy) still signals improving estimates, but a weak Value score of F, and Growth and Momentum scores of D suggest expectations are already high. The chart shows steadily rising 2026–2027 EPS lines and a mostly positive surprise pattern since 2023, consistent with a trend where estimates keep ratcheting higher.
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, March 11, 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 
Buy 
