This article looks at the 11 Best Performing Defense Stocks to Buy Now.
The S&P Composite 1500 Aerospace & Defense Index gained 1.41% last week, as defense stocks surged following Commerce Secretary Howard Lutnick’s suggestion that the United States might take ownership in some of them.
While talking to CNBC on August 26, Lutnick said there was a ‘monstrous discussion’ ongoing about the sector. The Commerce Secretary also singled out Lockheed Martin during the conversation and stated that the company was like ‘an arm of the U.S. government’, given how a majority of its revenue comes from federal contracts.
However, analysts are questioning the legality of such a move. Todd Harrison, a senior fellow at the American Enterprise Institute, was quoted as saying the following by Bloomberg:
“It’s one thing for the government to bail out a company that’s critical to national security if it’s at risk of failing. It’s another thing entirely for the government to take an equity stake in a perfectly healthy company. It’s not clear why the administration thinks this is necessary and what legal authority it has to do such a thing.”
The speculations follow a series of recent interventions by the administration, including equity stakes in Intel, and recent revenue-sharing deals with Nvidia and AMD.
Lutnick has denied criticism that the moves amount to socialism. Subsequently, Kush Desai, the White House spokesperson, added that President Trump was looking to safeguard national and economic security, and that the administration will continue exploring other deals while ensuring the best bargain for taxpayers.
With that said, let’s now head over and discuss the best performing stocks to buy in the defense industry.
The New York Stock Exchange building. Photo by Дмитрий Трепольский on Pexels
Our Methodology
For this article, we went through screeners to identify stocks in the defense industry. From there, we picked the top 11 stocks with the highest year-to-date percentage gains in share price, as of the close of business on August 28, 2025, and listed them in ascending order.
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).
11 Best Performing Defense Stocks to Buy Now:
11. Optex Systems Holdings, Inc (NASDAQ:OPXS)
YTD Gains as of August 28: 62.95%
Optex Systems Holdings, Inc (NASDAQ:OPXS) is among the 11 Best Performing Defense Stocks to Buy Now. On August 5, the firm was awarded a $1.6 million order from General Dynamics Land Systems Canada for laser-protected periscopes that are vital for the mission capabilities of armored vehicles.
With this order, Optex Systems Holdings, Inc (NASDAQ:OPXS)’s backlog has crossed the $45 million mark. Deliveries are scheduled for FY 2026. The contract also reaffirms the company’s leadership in laser-protected vision systems and its commitment to aiding the mission readiness of American allies. Its periscopes and optical sighting systems offer enhanced durability, reliability, and superior optical clarity in harsh combat environments.
In other news, Optex Systems Holdings, Inc (NASDAQ:OPXS) recently reported strong results for the three months ended June 29, 2025. The company’s revenue surged 22.6% year-over-year, while net income grew 19.7% from the prior period. The encouraging results were driven by higher periscope production at the Richardson facility and rising customer demand across the Richardson and Applied Optics segments.
Optex Systems Holdings, Inc (NASDAQ:OPXS) develops optical sighting systems and assemblies, mainly for Department of Defense (DOD) applications. The stock has had impressive returns in 2025, surging over 60% year-to-date.
10. GE Aerospace (NYSE:GE)
YTD Gains as of August 28: 63.71%
GE Aerospace (NYSE:GE) is among the 11 Best Performing Defense Stocks to Buy Now, with its share price surging over 63% year-to-date. However, the company is encountering a major labor strife with more than 600 UAW workers going on strike at two facilities.
On August 28, workers at the firm’s Evendale, Ohio, plant, which builds industrial and marine engines for the Navy, and the Erlanger distribution facility in Kentucky, which supplies parts to engine plants, went on strike after failing to reach a new contract agreement.
This marks the latest strike in a wave of labor unrest across the aerospace sector, with workers pressing to secure new contracts that offer higher wages and job protection. Union members had voted in favor of a strike if a new agreement was not reached with GE Aerospace (NYSE:GE) by August 27.
A spokesperson for GE Aerospace (NYSE:GE) told Reuters that the firm had activated a contingency plan, while adding that it was disappointed at the union deciding to strike before the workers were given a chance to vote on the offer.
