10 Undervalued Aerospace and Defense Stocks to Buy

In this article, we will look at the 10 Undervalued Aerospace and Defense Stocks to Buy.

Aerospace and defense stocks were off to a strong start early in the year, driven by high backlogs and geopolitical tensions in the Middle East. As of March, the S&P 500 Aerospace and Defense sector was up 12%, outperforming the overall market, which had plunged into correction territory.  Fast forward: tables have turned, and the sector has given back all its gains and is down about 2% for the year.

The underperformance came as  production bottlenecks and uncertainty over the US military budget triggered a massive sell-off, despite the ongoing Middle East conflict. Shares of some of the biggest defense and aerospace companies have  fallen despite the military’s massive expenditure ordinance.

“[The US has] burned through munitions much faster than we can produce them. Defense companies may receive some money up front, but they typically don’t profit until they deliver. “If that delivery takes time, why should stock prices have risen more than they already have on profits that won’t be realized for years?” said Steven Grey, chief investment officer at Grey Value Management.

Funds have also flowed out of defense-oriented ETFs as investors pivot towards safe-haven sectors such as energy and utilities.

Nevertheless, the  Aerospace and Defense sector’s long-term outlook remains positive amid the expected higher defense spending. Government spending commitments are rising, driven by global geopolitical tensions and rapid  technological advancements in AI-enabled and space-based systems.

“The longer-term growth picture remains intact … driven by a need for countries around the globe to rebuild ​their capabilities after decades of underinvestment,” Hargreaves Lansdown’s Chiekrie said.

High backlogs and strong demand for aircraft engines support the aerospace and defense sector’s long-term outlook. With that in mind, let’s take a look at some of the best undervalued aerospace and defense stocks to buy.

Our Methodology

To compile a list of 10 Undervalued Aerospace and Defense Stocks to Buy, we used Finviz and Yahoo Screener. From the screeners, we settled on the biggest aerospace and defense stocks. We trimmed the list to stocks with a forward price-to-earnings multiple of below 20. We also focused on stocks with upside potential of more than 10%, and that are popular among elite hedge funds in Q4 2025. The stocks are ranked in ascending order by their upside potential.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows 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).

Undervalued Aerospace and Defense Stocks to Buy

10. General Dynamics Corporation (NYSE:GD)

Forward P/E: 18.89

Stock Upside Potential: 12.53%

Number of Hedge Fund Holders: 66

General Dynamics Corporation (NYSE:GD) is one of the undervalued aerospace and defense stocks to buy. On May 8, General Dynamics Corporation (NYSE:GD) inked a strategic collaboration with Kodiak AI to accelerate the development of autonomous ground vehicles for defense applications.

The strategic partnership aims to integrate Kodiak AI-powered virtual driver technology with General Dynamics Land Systems’ ruggedized platform development capabilities. General Dynamics is to handle vehicle integration, power systems, and communications.

The collaboration focuses on delivering commercially inspired platforms that can be adapted for military use. The integration also paves the way for the two companies to pursue opportunities with the US Army and internationally.

Previously, General Dynamics has collaborated with Kodiak AI on the Leonidas Autonomous Ground Vehicle. The vehicle uses a modified commercial Ford F-600 truck for counter-drone operations. They settled on the Ford Truck platform to align with the Pentagon’s commercial-first strategy, which seeks to reduce acquisition costs and accelerate deployment timelines.

General Dynamics Corporation (NYSE:GD) manufactures business jets (Gulfstream), nuclear submarines, armored combat vehicles, and provides IT/mission systems. It is a top contractor for the U.S. government and allies, specializing in shipbuilding and land combat technologies.

9. V2X, Inc. (NYSE:VVX)

Forward P/E: 10.52

Stock Upside Potential: 12.58%

Number of Hedge Fund Holders: 33

V2X, Inc. (NYSE:VVX) is one of the undervalued aerospace and defense stocks to buy. On May 5, analysts at Truist Securities reiterated a Hold rating on V2X, Inc. (NYSE:VVX) and hiked the price target to $70 from $68.

The price target hikes come on the heels of the company delivering impressive first-quarter results and hiking guidance due to incremental work in national security, Middle East operations, and T-6 programs. In the first quarter, V2X achieved $1.53 in earnings per share, up 55% year over year and  better than the $1.24 a share expected. Revenue was up 23% year-over-year to $1.25 billion, better than the $1.13 billion expected.

The better-than-expected results came as the company secured 50 awards in the quarter, totaling $4.1 billion, and bringing the total backlog to $13.8 billion. Consequently, V2X management increased the full-year outlook in line with the momentum.

Full-year revenue is expected to range between $4.825 billion and $4.975 billion, up from the previous guidance of $4.675 billion to $4.825 billion. The company also expects diluted earnings per share of between $5.75 and $6.15, up from its previous guidance of $5.50 to $5.90.

V2X, Inc. (NYSE:VVX) Inc. is a leading provider of critical mission support and integrated solutions for defense, national security, and international clients. The company provides services across the entire mission lifecycle—preparation, operations, and sustainment.

8. Textron Inc. (NYSE:TXT)

Forward P/E: 12.70

Stock Upside Potential: 14.67%

Number of Hedge Fund Holders: 44

Textron Inc. (NYSE:TXT) is an undervalued aerospace and defense stock to buy. On May 5, Textron Inc. (NYSE: TXT)’s unit, Textron Aviation, opened a new service facility at Essendon Fields Airport in Melbourne, one of the most established aviation hubs.

The facility will expand factory-direct support for Cessna, Beechcraft, and Hawker customers across Australia and the Asia Pacific, strengthening Textron’s global service network and capacity.

The Essendon facility is more than double Textron Aviation’s previous facilities, covering more than 35,000 square feet and designed to support more than 1,400 Cessna, Beechcraft, and Hawker aircraft operating across the Asia-Pacific region.

The facility underscores the company’s Airport Master Plan that focuses on consolidating operations on the main field and improving safety and efficiency while responding to strong demand for new hangar space.

Textron Inc. (NYSE:TXT) is a multi-industry conglomerate designing, manufacturing, and servicing products in aerospace, defense, industrial, and finance sectors. Major brands include Cessna, Beechcraft, Bell, and E-Z-GO, providing military aircraft, specialty vehicles, and industrial turf care products worldwide.

7. Lockheed Martin Corporation (NYSE:LMT)

Forward P/E: 16.06

Stock Upside Potential: 24.06%

Number of Hedge Fund Holders: 59

Lockheed Martin Corporation (NYSE:LMT) is an undervalued aerospace and defense stock to buy. On May 12, during the Balikatan 2026 exercise, Lockheed Martin Corporation (NYSE:LMT) successfully demonstrated the integration of sensors, fires systems, and airspace management via a unified data platform.

The platform demonstrated its ability to compress sensor-to-shooter timelines, accelerate warfighter capability, and provide a real-time view of the battlefield. The Team Lockheed Martin NGC2 collaborated with the Capability Program Executive Command and Control Information Network, the Armed Forces of the Philippines, the I Marine Expeditionary Force, I Corps, and the 613 Air Operations Center to conduct the operational exercises.

It marked the first time that the Lockheed Martin team successfully demonstrated cross-domain data sharing in the 25ID operational movement. The company is poised to collaborate across the industry with companies such as Raft, Rune, and Amazon Web Services to integrate best-in-class capabilities into the platform.

Lockheed Martin Corporation (NYSE:LMT) is a global security and aerospace company primarily focused on the research, design, development, manufacture, and sustainment of advanced technology systems, products, and services. As a top defense contractor, it specializes in military aircraft (like the F-35), missiles, space systems, and radar technologies for the U.S. and allied governments.

6. Huntington Ingalls Industries, Inc. (NYSE:HII)

Forward P/E: 16.45

Stock Upside Potential: 25.47%

Number of Hedge Fund Holders: 39

Huntington Ingalls Industries, Inc. (NYSE:HII) is an undervalued aerospace and defense stock to buy. On May 5, Huntington Ingalls Industries (NYSE:HII) delivered robust first-quarter 2026 results, driven by strong revenue growth.

Revenue in the quarter was up 13.4% year over year to $3.1 billion, driven by growth at Newport News Shipbuilding, Ingalls Shipbuilding, and Mission Technologies. Net earnings in the quarter came in at $149 million, or $3.79 a share, in line with last year’s same-quarter earnings.  Huntington Ingalls Industries secured $4 billion worth of new contracts.

During the quarter, Huntington Ingalls Industries expanded its UK unmanned operations facility, strengthening its international presence. The company was also selected to compete for the $25.4 billion Advanced Technology Support Program V (ATSP5) microelectronics multi-award contract.

Following  an impressive first quarter, the company has reaffirmed its full-year and medium-term outlook. It expects revenue growth of about 6% and medium-term shipbuilding revenue growth of 6%. Shipbuilding revenue is expected to range between $9.7 billion and $9.9 billion, with an operating margin of 5.5% to 6.5%.

Huntington Ingalls Industries, Inc. (NYSE:HII) is the largest military shipbuilding company in the United States, specializing in the design, construction, and maintenance of nuclear-powered aircraft carriers and submarines for the U.S. Navy and Coast Guard. It also produces amphibious assault ships, national security cutters, and develops advanced defense technologies, including cyber solutions and uncrewed autonomous systems.

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