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.
Copyright: scanrail / 123RF Stock Photo
Our 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.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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.
8. Curtiss-Wright Corporation (NYSE:CW)
Number of Hedge Fund Holders: 60
With significant upside potential, Curtiss-Wright Corporation (NYSE:CW) secures a spot on our list of the 10 Best Defense Contractor Stocks to Buy Now.
On September 15, 2025, Curtiss-Wright Corporation (NYSE:CW) reached its record high of $518.00, marking a 46.03% return on a year-to-date basis and a 55.98% return in the past year.
Furthermore, Curtiss-Wright Corporation (NYSE:CW) has maintained dividend payments for 52 consecutive years, recently increasing its payout by 14.3%. On September 10, the company expanded its 2025 share repurchase program by $200 million, taking it to over $450 million for the year. With these efforts, the company reinforces its commitment to long-term value creation. At the same time, it also declared a quarterly dividend of $0.24 per share, payable on October 10, 2025.
This expanded buyback supports Curtiss-Wright Corporation (NYSE:CW)’s “Pivot to Growth” strategy and healthy balance sheet. Furthermore, it positions the company for record annual repurchases in 2025.
Curtiss-Wright Corporation (NYSE:CW) offers engineered products, solutions, and services to aerospace and defense, commercial power, process, and industrial markets globally. It is one of the Best Defense Contractor Stocks.
7. General Dynamics Corporation (NYSE:GD)
Number of Hedge Fund Holders: 61
General Dynamics Corporation (NYSE:GD) is one of the 10 Best Defense Contractor Stocks to Buy Now.
On September 19, 2025, General Dynamics Corporation (NYSE:GD) announced its subsidiary General Dynamics Land Systems’ collaboration with Daimler Truck Holding AG. The collaboration, relating to military vehicles, aims at winning more contracts as global defense spending accelerates.
This collaboration builds on Daimler’s Mercedes-Benz Special Trucks segment, which delivers Zetros and Unimog off-road trucks demanded by NATO allies. The agreement will see General Dynamics Corporation (NYSE:GD) and Daimler jointly deliver complete logistics vehicles with long-term service support across Europe, North America, and additional markets.
With its Aerospace, Marine Systems, Combat Systems, and Technologies segments, General Dynamics Corporation (NYSE:GD) functions as a global aerospace and defense company. It is one of the Best Defense Contractor Stocks.
6. Axon Enterprise, Inc. (NASDAQ:AXON)
Number of Hedge Fund Holders: 62
With significant upside potential, Axon Enterprise, Inc. (NASDAQ:AXON) secures a spot on our list of the 10 Best Defense Contractor Stocks to Buy Now.
On September 15, 2025, Dedrone by Axon Enterprise, Inc. (NASDAQ:AXON) announced its partnership with Mobile Camera Security (MCS) to develop and manufacture a locally produced DedroneRapidResponse counter-drone trailer for the Australian, New Zealand, and Indo-Pacific markets.
The mobile airspace-security system, which was unveiled at the Australia New Zealand Intelligence Forum (ANZIF), integrates Dedrone’s multi-sensor drone-detection technology with MCS’s diesel- and solar-powered mobile surveillance expertise. It enables rapid deployment in under 20 minutes. With this collaboration, Axon Enterprise, Inc. (NASDAQ:AXON)’s division, alongside MCS, aims to strengthen sovereign counter-drone capability in the region, reflecting the growing demand for locally built defense technologies.
Axon Enterprise, Inc. (NASDAQ:AXON) offers TASER-brand conducted energy devices, along with hardware and cloud-based software for law enforcement agencies globally. It is one of the Best Defense Contractor Stocks.
5. HEICO Corporation (NYSE:HEI)
Number of Hedge Fund Holders: 69
HEICO Corporation (NYSE:HEI) is one of the 10 Best Defense Contractor Stocks to Buy Now.
On September 5, 2025, BofA Securities increased its price target on HEICO Corporation (NYSE:HEI) from $355 to $400, maintaining a ‘Buy’ rating. The investment bank cited the company’s nimble, decentralized operations and focus on lower pricing that continue to drive market share gains.
Furthermore, in its latest quarter, HEICO Corporation (NYSE:HEI) reported a 30% year-over-year increase in its net income, which hit $177.3 million. Meanwhile, net sales grew 16% and operating income climbed 22% to $265 million. For the first nine months of fiscal 2025, the company’s net income rose 34%, sales climbed 15%, and operating income increased by 22%. BofA believes the company is well-positioned to sustain its double-digit growth, thanks to its pricing strategy and tactical supply-chain management, despite industry pressures.
HEICO Corporation (NYSE:HEI) offers aerospace, defense, and electronic products and services globally. It is one of the Best Defense Contractor Stocks.
4. RTX Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 71
With significant upside potential, RTX Corporation (NYSE:RTX) secures a spot on our list of the 10 Best Defense Contractor Stocks to Buy Now.
On September 22, 2025, RTX Corporation (NYSE:RTX) completed a critical review of its new Advanced Electronic Warfare (ADVEW) prototypes for the U.S. Navy’s F/A-18E/F Super Hornet, which is a system designed to replace current electronic warfare equipment and improve the aircraft’s defensive capabilities.
With the review, RTX Corporation (NYSE:RTX) validated software progress, hardware integration, and alignment with government architecture. This keeps the program on track for the Navy’s accelerated fielding timeline.
Pratt & Whitney, a global aerospace and defense leader, delivers aviation, integrated defense systems, and next-generation technologies for governments and commercial customers globally. It is one of the Best Defense Contractor Stocks.
3. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 73
Lockheed Martin Corporation (NYSE:LMT) is one of the 10 Best Defense Contractor Stocks to Buy Now.
On September 19, 2025, Lockheed Martin Corporation (NYSE:LMT) won two U.S. Department of Defense contract modifications, totaling about $48.6 million.
The first adjustment, worth $29.4 million, relates to a Joint Air-to-Surface Standoff Missile enterprise software contract, lifting its total value to $185.4 million. The software’s work will run through March 2029 and includes foreign military sales to Australia, Finland, Japan, the Netherlands, and Poland.
The second adjustment, worth $19.2 million, is tied to Lockheed Martin Corporation (NYSE:LMT)’s GPS III follow-on Award Fee Period Six, raising the contract’s value to $4.12 billion. The contract’s work will be carried out in Littleton, Colorado. Funding for both contracts is provided through a mix of U.S. research and development allocations and Foreign Military Sales funds.
Lockheed Martin Corporation (NYSE:LMT), a global aerospace and defense company, researches, designs, develops, manufactures, integrates, and sustains technology systems and services globally. It is one of the Best Defense Contractor Stocks.
2. GE Aerospace (NYSE:GE)
Number of Hedge Fund Holders: 100
With significant upside potential, GE Aerospace (NYSE:GE) secures a spot on our list of the 10 Best Defense Contractor Stocks to Buy Now.
On September 23, 2025, Vertical Research Partners increased its price target on GE Aerospace (NYSE:GE) from $300 to $340, maintaining a ‘Buy’ rating. The research firm cited the company’s strong earnings and cash-flow momentum.
Looking ahead, Vertical Research Partners expects GE Aerospace (NYSE:GE) to report $5.74 per share in earnings in 2025 (up from $5.64) and $6.69 in 2026 (up from $6.61). Furthermore, the firm forecasts free cash flow of $7.0 billion in 2025, which would increase to $7.4 billion next year.
GE Aerospace (NYSE:GE) designs and operates commercial and defense aircraft engines, integrated engine components, and related systems globally. It is one of the Best Defense Contractor Stocks.
1. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 101
The Boeing Company (NYSE:BA) is one of the 10 Best Defense Contractor Stocks to Buy Now.
On September 23, 2025, negotiations between the U.S. and China over a Boeing aircraft order, which is “huge” according to Ambassador David Perdue, moved into its final stages. This reflects the renewed demand from one of the company’s biggest markets.
The ambassador, who spoke in Beijing with a bipartisan U.S. delegation, stated that the deal could close within weeks. However, he did not give any details. Bloomberg reported earlier that The Boeing Company (NYSE:BA) may sell up to 500 aircraft to China. If this materializes, it would help end a prolonged sales slump and offset safety scrutiny.
Furthermore, the U.S. Department of Defense announced a day earlier that multiple contracts had been awarded to The Boeing Company (NYSE:BA), worth more than $93 million, including a $55.8 million contract for Qatar’s F-15 program, a $7.5 million modification to support Germany’s P-8 Poseidon aircraft, and a $30.3 million modification covering Kuwait’s AH-64E Apache helicopters. These wins reflect the company’s ongoing strength across both commercial and defense segments.
With its Commercial Airplanes, Defense, Space & Security, and Global Services segments, The Boeing Company (NYSE:BA) designs and services commercial jetliners and defense systems globally. It is one of the Best Defense Contractor Stocks.
While we acknowledge the potential of BA to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than BA and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 11 Best Roth IRA Stocks to Invest in Now and 11 Best Coal Stocks to Buy According to Hedge Funds.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email below.
