In this article, we discuss the 10 Best Defense Contractor Stocks to Buy Now.
The Pentagon has recently accelerated its shift toward agile and adaptable combat systems. Amid this, smaller U.S. defense contractors have been some of 2025’s strongest market performers. Countries that are upgrading their militaries are prioritizing low-cost, next-generation technology such as AI-enabled drones and unmanned vehicles. This reduces reliance on ground forces and can be fielded faster.
Amid the surge in demand, powerful equity gains have been noted. The NYSE Arca Defense Index has returned 37.53% on a year-to-date basis through September 24. This gain is twice the S&P 500’s 12% return over the same period. Drone makers have led the rally, while seven of the top ten performers on the index are mid- and small-cap companies.
Reuters reported that Stifel’s Jon Siegmann, who covers aerospace and defense, said that following a quiet start to the year, war actions in Ukraine and Gaza have led to a surge in defense spending globally, drawing fresh investor attention to the sector.
That interest goes beyond Wall Street, as on August 27, 2025, Bloomberg reported that U.S. Commerce Secretary Howard Lutnick spoke to CNBC, saying that there is “a monstrous discussion about defense” going on within the administration, indicating that the government could consider acquiring stakes in defense stocks, similar to its unorthodox 10% share in Intel.
With this growing investor attention toward the defense sector, it is high time to discuss the top performers, which takes us to our list of the 10 Best Defense Contractor Stocks to Buy Now.
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Methodology
To curate our list of the 10 Best Defense Contractor Stocks to Buy Now, we used the Finviz screener to extract a list of defense contractor stocks with strong market capitalization. Next, we assessed hedge fund sentiment surrounding these stocks using Insider Monkey’s hedge fund database, which tracks over 1,000 hedge funds. Finally, we present our list of the best defense contractor stocks in ascending order based on the number of hedge funds holding stakes in each stock, as of Q2 2025.
10. BWX Technologies, Inc. (NYSE:BWXT)
Number of Hedge Fund Holders: 52
With significant upside potential, BWX Technologies, Inc. (NYSE:BWXT) secures a spot on our list of the 10 Best Defense Contractor Stocks to Buy Now.
On September 23, 2025, BWX Technologies, Inc. (NYSE:BWXT) announced its Kinectrics division, which secured a multi-year contract from Sumitomo Electric Industries to provide commissioning testing services for Germany’s A-Nord Corridor project.
This large-scale infrastructure initiative, which is jointly developed by transmission operator Amprion, aims to build a 525 kV DC underground cable system to move North Sea renewable energy to North Rhine-Westphalia by 2030. With this, it supports Germany’s CO₂ reduction goals.
With this move, BWX Technologies, Inc. (NYSE:BWXT)’s subsidiary plans to deploy up to 14 mobile Resonant Test Systems to conduct ACHV testing on 40 km sections of cable, perform distributed partial discharge measurements to detect defects early, and carry out final HVDC testing to verify system integrity before commercial operation. Furthermore, the company aims to reduce late-stage failures and ensure critical functions under real-world conditions.
BWX Technologies, Inc. (NYSE:BWXT) is a manufacturer of precision naval nuclear components, reactors and fuel. It is one of the Best Defense Contractor Stocks.
9. L3Harris Technologies, Inc. (NYSE:LHX)
Number of Hedge Fund Holders: 53
L3Harris Technologies, Inc. (NYSE:LHX) is one of the 10 Best Defense Contractor Stocks to Buy Now.
On September 22, 2025, L3Harris Technologies, Inc. (NYSE:LHX) successfully presented an AI-enabled drone detection system at the Department of War’s Technology Readiness Experimentation event in Melbourne, Florida. It demonstrated the drone detection system alongside Shield AI.
With this demonstration, L3Harris Technologies, Inc. (NYSE:LHX) showed the system could detect hostile drones faster at longer ranges than current systems. The drones could do this even when they were partially obscured by buildings or clouds.
These drones feature L3Harris Technologies, Inc. (NYSE:LHX)’s WESCAM MX-Series electro-optical/infrared sensors, which are integrated with Shield AI’s Tracker counter-UAS software to track multiple classes of unmanned aerial systems. Both companies believe that this collaboration enhances combat-proven targeting systems with autonomy and passive detection to counter the increasing tide of low-cost complex drone threats.
L3Harris Technologies, Inc. (NYSE:LHX) delivers end-to-end technology solutions, connecting the space, air, land, sea, and cyber domains to fulfill mission-critical national security needs globally. It is one of the Best Defense Contractor Stocks.
