In this article, we will discuss 10 Most Undervalued Defense Stocks to Buy According to Analysts.
While investing in defense stocks, billionaire investors and hedge fund managers are not reacting to headlines; they are reacting to something far more enduring: a world in which geopolitical risk has become a permanent feature, not a temporary shock. In that environment, defense has quietly reasserted itself as one of the most structurally reliable sectors in global equities.
Unlike cyclical industries that rise and fall with consumer demand or credit conditions, defense spending is anchored by government budgets, strategic alliances, and national security priorities. For sophisticated investors, that makes the sector less of a trade and more of a long-duration annuity stream disguised as an industrial business. Investors in the mold of Warren Buffett have long appreciated this dynamic, with companies such as Lockheed Martin and Northrop Grumman offering predictable cash flows, multi-year contract visibility, and high barriers to entry.
Macro investors see an even broader picture. For managers like Ray Dalio, defense spending is not discretionary—it is a reflection of global order, power competition, and alliance commitments. As geopolitical tensions rise and military budgets expand across NATO and Asia, defense contractors increasingly benefit from structural demand rather than economic cycles.
Hedge funds are particularly drawn to this visibility. In an environment where earnings uncertainty dominates much of the market, defense offers something rare: order books that extend years into the future and revenue streams tied to sovereign priorities rather than consumer sentiment. That makes the sector especially attractive during periods of heightened volatility or geopolitical stress.
Yet this is not a momentum trade. The smart money approach is highly selective, concentrating on large, diversified defense primes with strong balance sheets, deep government relationships, and dominant positions in critical systems.
The bottom line is simple: defense stocks are not driven by innovation cycles or hype narratives. They are driven by something far more persistent—the cost of security in an unstable world. And for hedge funds navigating a more fragmented global order, that makes them one of the most quietly dependable allocations in the market.
With this context in mind, here are some of the most undervalued defense stocks to buy according to analysts.
Our Methodology
We used screeners to identify defense stocks with a forward P/E ratio below 20. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds. We have ranked the stocks in descending order of their forward P/E to make the list easier to navigate.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10 Most Undervalued Defense Stocks to Buy According to Analysts
10. Cadre Holdings, Inc. (NYSE:CDRE)
Forward P/E: 19.57
Cadre Holdings, Inc. (NYSE:CDRE) announced on March 26 that it has entered into an agreement to acquire Alien Gear Holsters, along with selected assets from Tedder Industries, LLC, for $10.3 million through a court-supervised bankruptcy auction process. Management highlighted that the transaction provides an opportunity to acquire a well-recognized holster brand with an established direct-to-consumer footprint, bringing in an experienced team with a customer-centric approach. The acquisition is expected to generate operational synergies under Cadre’s existing operating model, with completion anticipated in the second quarter of 2026, subject to regulatory and bankruptcy court approvals.
On March 15, Jefferies reduced its price target on Cadre Holdings, Inc. to $45 from $55 while maintaining a Buy rating on the stock. The firm noted that Cadre’s fourth-quarter earnings missed expectations by 36%, with nuclear safety revenues declining 7% in fiscal 2025, although it also emphasized that the recent share price decline of 13% presents an attractive entry point. Despite near-term volatility, Jefferies reiterated that the company’s core investment thesis remains fundamentally intact.
Cadre Holdings, Inc. is a global manufacturer and distributor of safety and survivability equipment used by law enforcement agencies, first responders, and military personnel. The company is headquartered in Jacksonville, Florida, and its modern corporate structure was established in 2012, although its operational roots date back to 1964.
The acquisition of Alien Gear strengthens Cadre Holdings, Inc.’s consumer-facing portfolio and enhances its exposure to the expanding tactical equipment market, supporting longer-term revenue diversification. Despite near-term earnings pressure highlighted by Jefferies, the combination of brand expansion and disciplined acquisition strategy reinforces Cadre’s positioning as a consolidator in mission-critical safety equipment markets.
9. AAR Corp. (NYSE:AIR)
Forward P/E: 19.53
AAR Corp. (NYSE:AIR) announced on April 22 that it entered into a multi-year commercial distribution agreement with Woodward, Inc., expanding an existing relationship between the two companies. Under the arrangement, AAR will act as the preferred distributor of Woodward’s high-demand consumable components, including fuel filters, gaskets, and seals, for the CFM LEAP, GEnx, and CF34 engine platforms sold directly to commercial airlines. These components are essential to engine reliability and operational efficiency, and the agreement allows airline customers to access inventory through AAR’s global warehouse network with faster fulfillment and dependable support, particularly during Aircraft on Ground events.
On April 21, AAR Corp. also introduced Airvoyant, an artificial intelligence-driven aviation procurement platform designed to modernize sourcing and purchasing workflows. The solution enables buyers to connect directly with suppliers, search available inventory, obtain and consolidate quotations, and complete purchasing decisions through a simplified one-click process. Built on infrastructure provided by Amazon Web Services, the platform integrates with Aeroxchange’s network of more than 5,000 suppliers, significantly broadening procurement reach and efficiency for customers.
AAR Corp. is a leading independent aerospace and defense contractor that provides maintenance, repair, and overhaul services, aviation parts supply, and integrated operational solutions to commercial airlines and government customers worldwide. The company is headquartered in Wood Dale and was founded in 1951 by Ira Allen Eichner before being incorporated in 1955.
AAR Corp.’s expanded partnership with Woodward strengthens its recurring parts distribution business while increasing exposure to some of the most widely used commercial aircraft engines, supporting long-term revenue visibility. At the same time, the launch of Airvoyant demonstrates the company’s ability to leverage digital innovation to improve procurement efficiency, positioning the stock as an attractive way to gain exposure to both aerospace aftermarket growth and technology-driven margin expansion.
8. Northrop Grumman Corporation (NYSE:NOC)
Forward P/E: 19.07
Northrop Grumman Corporation (NYSE:NOC) received a $207.89 million contract modification on April 23 to extend logistics support services, increasing the total contract value to $596.01 million. The agreement supports foreign military sales to countries including South Korea, Japan, and NATO members, with work scheduled through 2027 and funded primarily through international defense budgets.
On the same day, Citi lowered its price target on Northrop Grumman Corporation to $742 from $807 while maintaining a Buy rating, citing peer multiple compression. However, the firm emphasized that the recent selloff appears overdone given strong underlying demand and expanding program execution across the company’s defense portfolio.
Northrop Grumman Corporation is a global aerospace and defense technology company specializing in advanced military systems, including aircraft, missile defense, space systems, and autonomous technologies. The company is headquartered in Falls Church, Virginia, and was formed in 1994 through the merger of Northrop Corporation and Grumman Aerospace.
The continued inflow of multi-year international contracts reinforces Northrop Grumman’s strong position in global defense modernization programs. Combined with resilient demand signals, these long-duration contracts support stable revenue visibility despite near-term valuation adjustments.
7. TAT Technologies Ltd. (NASDAQ:TATT)
Forward P/E: 18.25
TAT Technologies Ltd. (NASDAQ:TATT) faced mixed analyst revisions on April 25, with Stifel lowering its price target to $53 from $60 while maintaining a Buy rating due to supply chain disruptions affecting auxiliary power unit components. The firm noted that these headwinds are expected to persist into the first half of 2026, impacting near-term revenue and margins.
On April 8, B. Riley initiated coverage of TAT Technologies Ltd. with a Buy rating and a $61 price target, describing the company as an underfollowed aerospace aftermarket opportunity. The firm highlighted strong secular growth potential through 2035, driven by increasing demand in maintenance, repair, and overhaul services.
TAT Technologies Ltd. is a global provider of aerospace and defense solutions specializing in heat exchangers, environmental control systems, and related components for commercial, business, and military aircraft. The company is headquartered in Charlotte, North Carolina, and was founded in 1969.
While near-term operational disruptions may weigh on performance, the company’s exposure to long-cycle aerospace aftermarket demand supports a resilient long-term growth profile. Its forward P/E of approximately 18, combined with structural tailwinds in aircraft maintenance and modernization, places TAT Technologies among the most undervalued defense stocks to buy according to analysts, and it remains positioned for sustained expansion over time.
6. Mobilicom Limited (NASDAQ:MOB)
Forward P/E: 17.79
Mobilicom Limited (NASDAQ:MOB) announced on April 21 that it received $2.2 million in new purchase orders from a major U.S. drone manufacturer with over $5 billion in annual sales. The customer has integrated Mobilicom’s SkyHopper PRO and ICE cybersecurity suite into loitering munitions systems supplied under a $249 million U.S. Department of War program, with shipments already underway and continuing into 2026.
On April 14, Mobilicom Limited secured its first order from a new customer in the Asia-Pacific region for integration into an ISR drone platform. The deal includes multiple systems such as ground control units and secure datalinks, reflecting growing international demand for the company’s cybersecure autonomous solutions and potentially opening the door to further expansion across deployed platforms.
Mobilicom Limited is a provider of end-to-end cybersecurity and autonomous system solutions for drones, robotics, and unmanned platforms. The company is headquartered in Shoham, Israel, and was founded in 2006 by Oren Elkayam and Yossi Segal.
The increasing order flow from both U.S. defense programs and international customers demonstrates accelerating adoption of Mobilicom’s secure autonomous technologies. This expanding customer base and integration into large-scale defense programs strengthen its long-term revenue visibility and growth trajectory in a rapidly expanding drone ecosystem.
5. Huntington Ingalls Industries, Inc. (NYSE:HII)
Forward P/E: 17.67
Huntington Ingalls Industries, Inc. (NYSE:HII) entered into a memorandum of understanding with Applied Intuition on April 21 to collaborate on the development of AI-enabled capabilities for next-generation naval platforms. The partnership focuses on advancing “Warship OS,” enabling AI-defined warships designed to support autonomous and manned-unmanned teaming operations, reflecting a broader push toward software-defined naval systems.
On the same day, Huntington Ingalls Industries, Inc. announced plans to expand production of its Romulus 151 unmanned vessels, with four additional units to be built in Louisiana alongside an initial prototype already under construction. Management emphasized that the program reflects a shift toward scalable unmanned maritime capability, combining autonomy, shipbuilding expertise, and industry partnerships to accelerate fleet deployment.
Huntington Ingalls Industries, Inc. is a leading U.S. naval shipbuilder specializing in the design, construction, and maintenance of nuclear-powered aircraft carriers and submarines, as well as surface combatants for the U.S. Navy and Coast Guard. The company is headquartered in Newport News, Virginia, and was formed in 2011.
The collaboration with Applied Intuition and the expansion of unmanned vessel production highlight HII’s strategic pivot toward AI-integrated naval warfare capabilities. These initiatives strengthen its long-term positioning in next-generation defense systems, where autonomy and rapid deployment are becoming increasingly critical.
4. General Dynamics Corporation (NYSE:GD)
Forward P/E: 17.38
General Dynamics Corporation (NYSE:GD) secured a $196.55 million cost-plus-fixed-fee contract on April 24 to support engineering, technical design, and design transfer activities related to nuclear submarine capabilities and sustainment for foreign military sales programs. The contract includes optional extensions that could raise its total value to $930.41 million, with work scheduled through at least 2027 and potentially extending to 2031 if options are exercised. Funding is primarily sourced from foreign partners, underscoring strong international demand for U.S. submarine technology.
On April 8, Deutsche Bank downgraded General Dynamics Corporation to Hold from Buy and reduced its price target to $387 from $404, citing concerns over valuation. The firm noted that the stock now trades at a premium relative to the S&P 500 compared with its historical discount and warned that its relative growth advantage may gradually narrow over time.
General Dynamics Corporation is a leading U.S. aerospace and defense contractor engaged in submarine construction, combat systems, business aviation through Gulfstream, and advanced defense technologies. The company is headquartered in Reston, Virginia, and traces its origins to 1952, with earlier historical roots extending back to 1899.
The latest contract win reinforces General Dynamics’ strong positioning in high-barrier, long-cycle defense programs with significant international demand. While valuation concerns may weigh on sentiment in the near term, sustained defense spending and multi-year contract visibility continue to underpin the company’s long-term earnings stability.
3. Embraer S.A. (NYSE:EMBJ)
Forward P/E: 17.12
Embraer S.A. (NYSE:EMBJ) saw mixed analyst activity in recent weeks, with UBS lowering its price target on the stock to $65 from $69 while maintaining a Neutral stance on March 26. The revision reflected a more cautious near-term outlook despite continued interest in the company’s aircraft delivery trajectory and backlog strength.
On March 10, JPMorgan raised its price target on Embraer S.A. to $84 from $80 while maintaining an Overweight rating, citing improved post-Q4 model assumptions and attractive valuation levels. The firm highlighted that Embraer’s discount to peers is expected to narrow over time, supported by strong growth prospects, improving returns, and a record backlog.
Embraer S.A. is a Brazilian aerospace manufacturer engaged in the design, development, production, and sale of aircraft across commercial, executive, defense, and agricultural aviation segments. The company is headquartered in São José dos Campos, São Paulo, Brazil, and was founded in 1969.
The divergent analyst views highlight both short-term valuation caution and long-term confidence in Embraer S.A.’s structural growth story. Continued backlog strength and improving profitability metrics support the case for sustained re-rating potential as execution remains consistent.
2. Lockheed Martin Corporation (NYSE:LMT)
Forward P/E: 16.05
Lockheed Martin Corporation (NYSE:LMT) faced mixed analyst revisions on April 24, with Susquehanna lowering its price target to $700 from $740 while maintaining a Positive rating following weaker-than-expected first-quarter earnings and free cash flow results. The adjustment reflected near-term financial pressure despite continued confidence in the company’s broader defense portfolio.
On the same day, Morgan Stanley also reduced its price target on Lockheed Martin Corporation to $653 from $675 while maintaining an Equal Weight rating, citing downward revisions to its 2026 earnings-per-share forecast. The firm adjusted its model following the first-quarter performance that came in below expectations.
Lockheed Martin Corporation is a global aerospace and defense company engaged in the design, development, and integration of advanced defense systems, including aircraft, missile systems, and space technologies. The company is headquartered in Bethesda, Maryland, and was formed in 1995 through the merger of Lockheed Corporation and Martin Marietta.
Despite near-term earnings pressure, Lockheed Martin Corporation continues to benefit from its entrenched position in mission-critical defense programs with long-term government demand visibility. The combination of strong defense exposure and persistent geopolitical tailwinds supports its structural investment appeal over the medium to long term.
1. StandardAero, Inc. (NYSE:SARO)
Forward P/E: 15.72
StandardAero, Inc. (NYSE:SARO) announced on April 22 a long-term agreement with Rolls-Royce to provide repair and overhaul support for the MT7 marine gas turbine engine at its Maryville, Tennessee facility. The engine powers the U.S. Navy’s Ship to Shore Connector program, highlighting StandardAero’s expanding role in supporting critical naval mobility infrastructure.
On April 7, Jefferies lowered its price target on StandardAero, Inc. to $34 from $38 while maintaining a Buy rating, trimming near-term earnings expectations due to slightly weaker organic growth assumptions. The firm still views the company’s fundamentals positively despite modest downward revisions.
StandardAero, Inc. is a leading independent maintenance, repair, and overhaul provider serving commercial, military, business aviation, and industrial power customers. The company is headquartered in Scottsdale, Arizona, and was founded in 1911.
The long-term Rolls-Royce agreement enhances StandardAero’s exposure to stable, high-value defense-related maintenance contracts. Despite near-term earnings adjustments, its entrenched position in essential aviation and naval support services underpins durable long-term cash flow potential.
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