In this article, we will list the 5 Best Aerospace and Defense Stocks to Buy According to Hedge Funds. Please visit 10 Best Aerospace and Defense Stocks to Buy According to Hedge Funds if you’d like to see an extended list and the methodology behind it.
5. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 83
Lockheed Martin Corporation (NYSE:LMT) is among the 10 Best Aerospace and Defense Stocks to Buy According to Hedge Funds. On June 3, the company said it had successfully intercepted a test drone using a Joint-Air-to-Ground Missile (JAGM) from a shipping container.
Jordan Tan / Shutterstock.com
The development comes amid a surge in demand for cheaper alternatives to countering drones. It is worth noting that the Pentagon has long called for the deployment of containerized weapon systems because of their low cost and greater mobility.
The missile was fired from a GRIZZLY containerized launcher, while the Sanctum Counter-Unmanned Aerial System and R-40 radars built by Fortem Technologies were used to track and engage the drone threat.
According to Lockheed Martin Corporation (NYSE:LMT)’s press release, the launcher can be mounted on ground sites or maritime platforms, with the capacity to have up to eight rounds of munitions at a time.
In other news, interest from institutional investors in the defense contractor has had a substantial rise sequentially. According to Insider Monkey’s database for Q1 2026, 83 hedge funds held a stake in the company, up from 59 in the previous quarter.
Moreover, while Wall Street has a cautious outlook for the stock, analysts’ price targets indicate an average share price upside potential of 20% as of the close on June 5.
Lockheed Martin Corporation (NYSE:LMT) is one of the world’s largest defense contractors. It specializes in the research, design, and development of advanced technology systems, products, and services. It is famed for manufacturing notable fighter jets, including the F-35.
4. TransDigm Group Incorporated (NYSE:TDG)
Number of Hedge Fund Holders: 87
TransDigm Group Incorporated (NYSE:TDG) is among the 10 Best Aerospace and Defense Stocks to Buy According to Hedge Funds, with 87 hedge funds holding a stake in the company at the end of the first quarter of 2026. This is up from 79 in Q4 2025, reflecting growing institutional investor interest.
On June 2, UBS analyst Gavin Parsons reiterated a Buy rating on the stock with a price target of $1,645, a reaffirmation of the firm’s earlier update on May 6 after the company reported results for Q2.
Based on recommendations from 12 analysts, TDG is a Moderate Buy with an average share price upside potential of 23% as of the close on June 5.
TransDigm Group Incorporated (NYSE:TDG) reported an 18% increase in quarterly net sales to $2,544 million, while net income increased 12% year-over-year to total $536 million. Adjusted earnings per share were posted at $9.85, up 8% from the same period in fiscal 2025.
The company attributed the improved profitability to increased net sales, deferred compensation expenses, and the success of its value-driven operational strategy. Given the strong results and the impact from recent acquisitions, the management lifted its full-year outlook for sales, EBITDA, and adjusted earnings per share.
TransDigm Group Incorporated (NYSE:TDG) manufactures engineered aircraft components for commercial and military aircraft.
3. RTX Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 95
RTX Corporation (NYSE:RTX) is among the 10 Best Aerospace and Defense Stocks to Buy According to Hedge Funds. On June 4, Jefferies analyst Sheila Kahyaoglu upgraded the stock to Buy from Hold and set a new price target of $220, up from $210.
According to Barron’s, the analyst cited rising profit margins, growth prospects in the commercial aerospace engine aftermarket, and a strong defense business among the reasons for the adjustment. Kahyaoglu was quoted as saying the following:
“RTX is home to leading franchises across Aerospace and Defense, with meaningful growth runway from marquee competitive positions and market growth [and defense] budget support.”
Jefferies believes RTX Corporation (NYSE:RTX)’s share repurchase program and improving profit margins could take its EPS to around $10.45 in 2028, which will be over $2 above Wall Street’s current projections.
As of the close of business on June 5, Wall Street has a Moderate Buy rating on the aerospace and defense conglomerate, with an average share price upside potential of 22%.
In other news, the defense contractor announced on June 3 that it had secured a $515 million contract for the SPY-6 family of radars from the U.S. Navy, building on the Integration and Production Support contract from 2025. The agreement will see Flight IIA destroyers being upgraded with the SPY-6(V)4 variant.
RTX Corporation (NYSE:RTX) is a giant in the global aerospace and defense industry, providing systems and services to commercial, military, and government clients. It operates through three main businesses: Collins Aerospace, Pratt & Whitney, and Raytheon.
2. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 99
The Boeing Company (NYSE:BA) is among the 10 Best Aerospace and Defense Stocks to Buy According to Hedge Funds. On June 4, Jefferies reiterated a Buy rating on the stock with a price target of $295.
Earlier in the week, on June 1, Wells Fargo analyst David E. Strauss also maintained an Overweight rating on the aerospace company with a price target of $250, according to TipRanks.
Reaffirmations of their bullish views on The Boeing Company (NYSE:BA) from both firms reflect confidence amid recovering demand, increased production, and potentially further future orders from China.
During President Trump’s visit to Beijing last month, China announced that it would buy 200 Boeing jets. While talking to the press after concluding his trip, the U.S president said that the order could rise to 750 aircraft.
As of the close on June 5, Wall Street has a Strong Buy rating on the aerospace company with a one-year average share price target of $274.14, which represents an upside potential of 27%.
The Boeing Company (NYSE:BA) is a leading aerospace company that manufactures commercial airplanes, space systems, and defense equipment for customers in more than 150 countries.
1. GE Aerospace (NYSE:GE)
Number of Hedge Fund Holders: 119
GE Aerospace (NYSE:GE) is among the 10 Best Aerospace and Defense Stocks to Buy According to Hedge Funds. On Sunday, the company’s CEO, Larry Culp, described China’s plan to acquire 200 Boeing jets as a significant step towards reopening sales in the country.
During the interview with CNBC in Rio de Janeiro, Culp said that he was confident about further aircraft engine orders from the Asian country after President Trump’s visit to Beijing last month secured order commitments for its manufacturing partner.
The Chinese president, Xi Jinping, has been invited by President Trump to the White House for a visit on September 24.
In other news, GE Aerospace (NYSE:GE) secured an official order in late May to provide propulsion power for the Navy’s ocean surveillance ships, T-AGOS. The agreement will include an LM2500+G4 marine gas turbine engine placed in a composite enclosure alongside an associated generator for the USNS Don Walsh ship, currently under construction in Mobile, Alabama.
As of the close on June 5, Wall Street has a Strong Buy rating on the stock with an average share price upside potential of 9%.
GE Aerospace (NYSE:GE) is a global aerospace propulsion, services, and systems company with an installed base of around 30,000 military and 50,000 commercial aircraft engines. It operates through two segments: Commercial Engines & Services (CES) and Defense & Propulsion Technologies (DPT).
While we acknowledge the potential of GE to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than GE and that has 100x upside potential, check out our report about the cheapest AI stock.
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