This article looks at the 12 Best Defense Stocks to Buy Right Now.
Smaller U.S. defense stocks have soared this year amid the Pentagon’s tilt towards agile and adaptable combat systems. Demand for low-cost, next-generation military technology is also on the rise as countries modernize their militaries with AI-powered drones and unmanned vehicles that are not only cheap but also cut dependence on ground forces.
The NYSE Arca Defense Index had returned nearly 34% year-to-date, as of the close on September 18, comfortably outpacing the S&P 500 index’s 12% rise during the period. Seven of the top ten gainers on the defense index were mid to small-cap firms, with drone makers leading the pack.
Jon Siegmann, who covers the aerospace and defense industry at Stifel, was quoted as saying the following by Reuters on the trend:
“The winners in this new market will be those companies leaning into the change and investing in low-cost, upgradable, and software-enabled weapon systems.”
After a sedate start to the year, the intensifying wars in Ukraine and Gaza have spurred defense expenditure across the world, which has lifted defense stocks and drawn investors’ attention back toward the sector.
With that said, let’s now head over to the list of the best defense stocks to buy right now.
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Our Methodology
We used screeners to identify stocks in the defense industry and from there selected the top 12 stocks with the highest number of hedge fund investors having a stake in them, based on Insider Monkey’s database of 983 prominent hedge funds as of Q2 2025. The stocks are listed in ascending order of hedge fund sentiment.
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).
12. L3Harris Technologies, Inc. (NYSE:LHX)
Number of Hedge Fund Holders: 53
L3Harris Technologies, Inc. (NYSE:LHX) is among the 12 Best Defense Stocks to Buy Right Now. On September 15, the company announced that it had won a multi-year, $292 million contract for continued production of propulsion for the Javelin weapon system.
This is the largest propulsion production contract received so far for the program and represents a production extension for 5 years. Ken Bedingfield, President, Aerojet Rocketdyne, L3Harris Technologies, Inc. (NYSE:LHX) stated the following on the award:
“Javelin provides a key capability for the United States, allies and partners. Our ongoing investments in modernized solid rocket motor manufacturing will allow us to increase production capacity for Javelin by incorporating the latest advancements in automation into the motor casting and installation processes.”
The company has been increasing solid rocket motor production through several programs as part of internal investments in manufacturing and a cooperative agreement with the Department of War.
L3Harris Technologies, Inc. (NYSE:LHX) is also incorporating a completely digital workflow for Javelin production, allowing for real-time tracking of data to enhance quality monitoring capabilities and provide greater control over production speed.
11. Woodward, Inc. (NASDAQ:WWD)
Number of Hedge Fund Holders: 54
Woodward, Inc. (NASDAQ:WWD) is among the 12 Best Defense Stocks to Buy Right Now. On September 16, the company announced plans to build a 300,000-square-foot precision manufacturing facility in South Carolina’s Spartanburg County.
The site will focus on the production of aircraft spoiler actuation systems. It is expected to become operational in 2027, with the company planning to progressively scale production and hiring in the years to follow to meet market demand.
Servo-hydraulic actuation systems are critical components used in aircraft flight control. Initially, Woodward, Inc. (NASDAQ:WWD) will utilize most of the factory’s capacity to produce spoiler actuation for the Airbus A350, the company said in a press release.
Woodward, Inc. (NASDAQ:WWD) will invest nearly $200 million on the site’s development. The project is expected to create 275 high-quality jobs in engineering, manufacturing, and business operations, with the potential for major workforce expansion in the future.
The investment is supported by an incentive package from the State of South Carolina, Spartanburg County, and some local economic development organizations.
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