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Buy 3 Defense Laggards of Past Month With Short-Term Price Upside
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Key Takeaways
Lockheed Martin lagged recently but shows 14.7% upside with strong F-35 demand and rising defense budgets.
Northrop Grumman benefits from global demand and defense spending, with 14.6% upside potential.
Elbit Systems projects 17.8% upside, driven by strong growth and advanced defense tech programs.
The defense aerospace industry is benefiting from rising geopolitical tensions, which are driving higher defense spending and long-term contracts, ensuring stable and predictable revenue streams. Despite these positives, a handful of defense aerospace behemoths lagged in the past month, giving negative returns.
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.
In January 2026, 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 attract investors.
The chart below shows the price performance of our three picks in the past month.
Image Source: Zacks Investment Research
Lockheed Martin Corp.
Lockheed Martin’s broad product offerings allow it to secure major defense contracts, which in turn boost its backlog count. LMT remains the largest U.S. defense contractor with a steady order flow from the Pentagon and other allies of the country.
Apart from enjoying a strong forte on the domestic front, LMT’s products are well-acclaimed in the international market. Increasing U.S. defense budget funding should boost its business. LMT continues to witness international interest in the Aegis Ballistic Missile Defense System (Aegis) from international customers, such as Japan, Spain, the Republic of Korea and Australia.
The production of F-35 jets is expected to continue for many years, given the government's current inventory target of 2,470 aircraft for the Air Force, Marine Corps and Navy by 2040. Moreover, LMT anticipates its global fleet to reach more than 3,500. One may expect LMT to witness more order inflows for F-35 in the coming days, which should significantly bolster this defense contractor’s top line.
Lockheed Martin has an expected revenue and earnings growth rate of 5.5% and 29.5%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.01% in the last 30 days.
The short-term average price target of brokerage firms represents an increase of 14.7% from the last closing price of $581.28. The brokerage target price is currently in the range of $483-$775. This indicates a maximum upside of 33.3% and a maximum downside of 16.9%.
Northrop Grumman Corp.
Northrop Grumman boasts a solid presence in Defense and Cyber Security programs, with its product line being well-positioned in high-priority categories. NOC witnesses strong demand for its products across the globe. The company boasts a strong financial position.
The current U.S. government’s inclination toward strengthening the nation’s defense system should benefit NOC. Foreign military sales also serve as a key growth catalyst for Northrop, with the company delivering its products and services to customers in 25 nations. NOC’s international sales totaled $5.99 billion in 2025, comprising 14% of total sales, and improving a solid 19.8% year over year.
Northrop Grumman has an expected revenue and earnings growth rate of 4.6% and 6.7%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.01% in the last 30 days.
The short-term average price target of brokerage firms represents an increase of 14.6% from the last closing price of $656.98. The brokerage target price is currently in the range of $406-$849. This indicates a maximum upside of 29.2% and a maximum downside of 38.2%.
Elbit Systems Ltd.
Elbit Systems is a worldwide leader in Night Vision Goggles Head-Up Displays (NVG-HUD). It is a major supplier to the U.S Army and U.S. Marine Corps of Night Vision Head-Up Display systems for use in various types of helicopters.
ESLT is engaged in a wide range of defense-related airborne, ground and command, control and communications programs throughout the world. ESLT’s focus is on the upgrading of existing military platforms and developing new technologies for defense applications.
ESLT operates through five segments: Aerospace; C4I and Cyber; Intelligence, Surveillance, Target Acquisition and Reconnaissance and Electronic Warfare; Land; and Elbit Systems of America.
Elbit Systems has an expected revenue and earnings growth rate of 14.3% and 21.3%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.9% in the last seven days.
The short-term average price target of brokerage firms represents an increase of 17.8% from the last closing price of $881.98. The brokerage target price is currently in the range of $930-$1,115. This indicates a maximum upside of 26.4% and no downside.
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Buy 3 Defense Laggards of Past Month With Short-Term Price Upside
Key Takeaways
The defense aerospace industry is benefiting from rising geopolitical tensions, which are driving higher defense spending and long-term contracts, ensuring stable and predictable revenue streams. Despite these positives, a handful of defense aerospace behemoths lagged in the past month, giving negative returns.
We have selected three such stocks with a favorable Zacks Rank that have double-digit price upside potential in the near term. These companies are: Lockheed Martin Corp. (LMT - Free Report) , Northrop Grumman Corp. (NOC - Free Report) and Elbit Systems Ltd. (ESLT - Free Report) . Each of our picks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Positive Catalysts
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.
In January 2026, 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 attract investors.
The chart below shows the price performance of our three picks in the past month.
Image Source: Zacks Investment Research
Lockheed Martin Corp.
Lockheed Martin’s broad product offerings allow it to secure major defense contracts, which in turn boost its backlog count. LMT remains the largest U.S. defense contractor with a steady order flow from the Pentagon and other allies of the country.
Apart from enjoying a strong forte on the domestic front, LMT’s products are well-acclaimed in the international market. Increasing U.S. defense budget funding should boost its business. LMT continues to witness international interest in the Aegis Ballistic Missile Defense System (Aegis) from international customers, such as Japan, Spain, the Republic of Korea and Australia.
The production of F-35 jets is expected to continue for many years, given the government's current inventory target of 2,470 aircraft for the Air Force, Marine Corps and Navy by 2040. Moreover, LMT anticipates its global fleet to reach more than 3,500. One may expect LMT to witness more order inflows for F-35 in the coming days, which should significantly bolster this defense contractor’s top line.
Lockheed Martin has an expected revenue and earnings growth rate of 5.5% and 29.5%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.01% in the last 30 days.
The short-term average price target of brokerage firms represents an increase of 14.7% from the last closing price of $581.28. The brokerage target price is currently in the range of $483-$775. This indicates a maximum upside of 33.3% and a maximum downside of 16.9%.
Northrop Grumman Corp.
Northrop Grumman boasts a solid presence in Defense and Cyber Security programs, with its product line being well-positioned in high-priority categories. NOC witnesses strong demand for its products across the globe. The company boasts a strong financial position.
The current U.S. government’s inclination toward strengthening the nation’s defense system should benefit NOC. Foreign military sales also serve as a key growth catalyst for Northrop, with the company delivering its products and services to customers in 25 nations. NOC’s international sales totaled $5.99 billion in 2025, comprising 14% of total sales, and improving a solid 19.8% year over year.
Northrop Grumman has an expected revenue and earnings growth rate of 4.6% and 6.7%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.01% in the last 30 days.
The short-term average price target of brokerage firms represents an increase of 14.6% from the last closing price of $656.98. The brokerage target price is currently in the range of $406-$849. This indicates a maximum upside of 29.2% and a maximum downside of 38.2%.
Elbit Systems Ltd.
Elbit Systems is a worldwide leader in Night Vision Goggles Head-Up Displays (NVG-HUD). It is a major supplier to the U.S Army and U.S. Marine Corps of Night Vision Head-Up Display systems for use in various types of helicopters.
ESLT is engaged in a wide range of defense-related airborne, ground and command, control and communications programs throughout the world. ESLT’s focus is on the upgrading of existing military platforms and developing new technologies for defense applications.
ESLT operates through five segments: Aerospace; C4I and Cyber; Intelligence, Surveillance, Target Acquisition and Reconnaissance and Electronic Warfare; Land; and Elbit Systems of America.
Elbit Systems has an expected revenue and earnings growth rate of 14.3% and 21.3%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.9% in the last seven days.
The short-term average price target of brokerage firms represents an increase of 17.8% from the last closing price of $881.98. The brokerage target price is currently in the range of $930-$1,115. This indicates a maximum upside of 26.4% and no downside.