What are the most attractive defense sector stocks right now for investors?
Seeking Alpha analysts Eliana Scialabba and Daniel Jones give us their picks.
Eliana Scialabba: Many countries are increasing defense budgets again, and most contractors have very strong backlogs. In that situation, I still like Lockheed Martin (LMT), RTX (RTX), and Northrop Grumman (NOC) because they show stable cash flow and programs that continue even when the cycle is uncertain.
I also think General Dynamics (GD) and L3Harris Technologies (LHX) offer a good mix of land, naval, and high-tech systems. Boeing (BA) is more of a tactical idea for me, with its defense and space unit improving. And in Europe, Thales (OTCPK:THLEF) looks interesting with its work in radar, satellites, and secure communications.
Daniel Jones: One company in this space that I have been bullish on recently is General Dynamics (GD), a massive business that focuses on providing, among other things, marine systems such as nuclear-powered submarines for the U.S. Navy. In September, I called it a “buy” candidate. This was based on recent wins that the company had achieved, with backlog skyrocketing while revenue and profits increased as well.
About 68.1% of the company’s revenue comes from the U.S. government, with another 9% attributable to other governments across the world. And with the current U.S. administration intent on funneling more money into defense, I fully expect the company’s growth trend to continue. I know that backlog is certainly pointing in that direction.
Outside of General Dynamics, a lot of the defense sector players look quite expensive, which is why my rating on most of them has been a “hold” as of late. But operationally speaking, some of these companies are doing exceptionally well. My last article about Woodward (WWD), a designer and producer of control solutions for the aerospace and industrial markets, ended with me rating it a “buy.” Since then, the stock has approximately doubled, which is more than triple the 30.1% rise that the S&P 500 has seen. This comes on the back of attractive growth.
Of course, Woodward (WWD) is not a pure-play prospect in the defense sector. Between the equipment and services that it offers, only approximately 22.4% of the firm’s revenue can be tied back to the defense industry. But with meaningful exposure to the commercial aviation space, as well as the power generation, transportation, and oil and gas sectors, there is certainly potential here. The only downside is that shares are rather pricey, with the business trading at a price-to-adjusted operating cash flow multiple of 34.2 and at an EV to EBITDA multiple of 26.9.
If you are valuation agnostic, another company that should certainly be on your radar is GE Aerospace (GE). The company is a massive player in the aviation sector, and in recent years, as air travel has picked up steam following the pandemic, it’s really sprung to life. In my article published in early September, I highlighted its attractive growth, with more growth almost guaranteed because of continued backlog expansion, which was $174.40 billion at the time. Admittedly, much of this is on the commercial side. That metric has since grown to $176.29 billion as of Q3 2025.
Overall, defense-oriented engine sales have been growing nicely. In the first nine months of fiscal 2025, the business sold 463, up significantly from the 306 sold a year earlier. We don’t know how much revenue the firm generated from these activities specifically. But considering that the total number of engines it sold during that window of time was 2,122, which includes commercial engines, it is clear that the defense sector plays a big role in its overall health.
Even outside of this, the company generates a lot of revenue in the defense sector, with its Defense & Systems segment accounting for $4.89 billion, or approximately 14.7%, of overall sales. Unlike General Dynamics (GD) and Woodward (WWD), my last rating on GE Aerospace (GE) was a “hold,” but that had a lot more to do with evaluation than the overall quality of the company, which I peg as top-notch.