10 Best Small Cap Defense Stocks to Buy According to Hedge Funds

5. Ducommun Incorporated (NYSE:DCO)

Number of Hedge Fund Holders: 15

Ducommun Incorporated (NYSE:DCO) is among the 10 Best Small Cap Defense Stocks to Buy According to Hedge Funds. On July 3, RBC Capital lifted its price target for the stock to $95 from $72, while maintaining an Outperform rating for its shares.

Analysts believe the company’s engineered products portfolio is a high-margin business, with the potential to drive significant earnings growth. Ducommun Incorporated (NYSE:DCO)’s shares have gained 36% year-to-date, which the firm attributed to strong commercial original equipment sentiment and an encouraging outlook for Boeing’s production ramp.

Moreover, RBC Capital sees continued value exposure for the stock in the small-cap defense sector, with the outlook being shaped by expected growth in fiscal 2026 defense spending.

Overall, Wall Street analysts remain bullish on the stock with a consensus Buy rating. Ducommun Incorporated (NYSE:DCO) provides manufacturing solutions to customers in the global aerospace, defense, military, space, and industrial markets.