13 Best Defense Stocks To Buy Now

Published October 19, 2023 at 9:02 am EDT Updated August 31, 2026 at 8:46 pm EDT

In this article, we will discuss the 13 best defense stocks to buy now.

The recent conflict between Israel and Hamas is reigniting worries about geopolitical risk for investors, who are already contending with the effects of increased interest rates, the Russia-Ukraine conflict, and emerging challenges in China’s economy. Last week, investors showed increased interest in exchange-traded funds that track defense companies in the United States and Europe, anticipating potential spillover effects from the Israel-Hamas conflict. The iShares U.S. Aerospace & Defense ETF, with a total value of $5 billion, witnessed net inflows of $7.2 million for the week ending Oct. 11. This marked a reversal from seven consecutive weeks of outflows. Similarly, the Invesco Aerospace & Defense ETF, valued at $2 billion, saw notable weekly net inflows of $48 million, marking its strongest performance since July 2022. Both funds experienced significant jumps of over 4% during the week, driven by robust performances of their top holdings Lockheed Martin Corporation (NYSE:LMT) and Northrop Grumman Corporation (NYSE:NOC), which surged 10% and 16%, respectively.

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The global aerospace and defense sector saw growth from $795.92 billion in 2022 to $855.62 billion in 2023, reflecting a compound annual growth rate (CAGR) of 7.5%. Projections suggest that the aerospace and defense market is set to further increase, reaching $1076.56 billion by 2027, signifying a CAGR of 5.9%. In addition, as revealed by Deloitte’s outlook survey, an impressive 88% of surveyed senior executives hold an optimistic view of the aerospace and defense industry for the upcoming year, ranging from somewhat positive to very positive. This optimism is attributed to various factors, including advancements in emerging technologies and sectors like advanced air mobility, evolving business models in fields such as space exploration, and the widespread adoption of digital thread and smart factory practices. In 2023, aerospace and defense enterprises that prioritize innovation and are ready to seize emerging opportunities are expected to surpass their peers, as per insights from Deloitte.

The ongoing conflicts in Ukraine and Gaza have significantly reduced arms stockpiles for both the U.S. and European nations. Consequently, defense contractors are poised to experience a consistent demand for the foreseeable future, fueled by the need to replenish missiles and other defense systems. To benefit from the growth potential in the defense industry, investors can look towards well-known market leaders, which include the likes of Lockheed Martin Corporation, RTX Corporation (NYSE:RTX), and The Boeing Company (NYSE:BA).

Photo by Joel Rivera-Camacho on Unsplash

Our Methodology

We screened for companies operating in the defense sector and picked the 30 largest companies operating in the space. We then sourced the hedge fund sentiment for these companies from Insider Monkey’s proprietary database of over 900 elite money managers. We narrowed down our selection to stocks that were the most widely-held by hedge funds. We have ranked these stocks in ascending order of the number of hedge funds that have stakes in them.

13. Curtiss-Wright Corporation (NYSE:CW)

Number of Hedge Fund Holders: 27

Curtiss-Wright Corporation (NYSE:CW), based in Davidson, North Carolina, is a manufacturer and service provider with operations and facilities both within and outside the United States. The company specializes in defense solutions encompassing air, land, sea, space, cyberspace, as well as industrial applications.

On October 9. Curtiss-Wright Corporation successfully obtained a five-year, $34 million firm-fixed-price indefinite delivery, indefinite quantity (IDIQ) contract with the Naval Surface Warfare Center (NSWC). The contract involves the supply of Modular Open Systems Approach (MOSA) based airborne data recorder technology, designated for utilization on both U.S. and Australian manned and unmanned maritime aircraft.

Curtiss-Wright Corporation was held by 27 hedge funds at the end of Q2 2023. These funds held positions worth $294.6 million in the company, up from $243.8 million in the previous quarter when 23 hedge funds held stakes in the company. The hedge fund sentiment for the stock is positive. As of the quarter ending June, Robert Joseph Caruso’s Select Equity Group is the top shareholder in Curtiss-Wright Corporation and has disclosed a stake worth $132.7 million.

In addition to Lockheed Martin Corporation, RTX Corporation, and The Boeing Company, Curtiss-Wright Corporation is one of the best defense stocks to buy now.

12. Textron Inc. (NYSE:TXT)

Number of Hedge Fund Holders: 28

Textron Inc. (NYSE:TXT) is a diversified American industrial conglomerate headquartered in Providence, Rhode Island. The company’s subsidiaries encompass Arctic Cat, Bell Textron, Textron Aviation, and Lycoming Engines. It was established by Royal Little in 1923 under the name Special Yarns Company.

On August 7, the U.S. Navy awarded Textron Inc. a contract valued at around $241.37 million. The contract involves procuring materials and undertaking non-recurring activities associated with five Ship to Shore Connector Landing Craft Air Cushion 100 Class. The project is slated for completion by October 2025.

According to Insider Monkey’s second quarter database, 28 hedge funds were bullish on Textron Inc., compared to 25 funds in the preceding quarter. Cliff Asness’ AQR Capital Management is the largest stakeholder of the company, with 1.78 million shares worth $120.6 million.

11. Spirit AeroSystems Holdings, Inc. (NYSE:SPR)

Number of Hedge Fund Holders: 30

Spirit AeroSystems Holdings, Inc. (NYSE:SPR), headquartered in Wichita, Kansas, stands as one of the globe’s major producers of aerostructures for commercial aircraft, defense platforms, and business/regional jets. The company is engaged in the design, engineering, and production of fuselages, nacelles (including thrust reversers), struts/pylons, wing structures, and flight control surfaces.

On October 3, Spirit AeroSystems Holdings, Inc. revealed a strategic collaboration with Expleo in Tulsa, Oklahoma, and Infosys in Richardson, Texas, aimed at enhancing the company’s engineering capacities in both states. The partnership with Expleo is set to provide advanced digital engineering services for significant aerospace programs from a new site in Tulsa.

As of the second quarter of 2023, Spirit AeroSystems Holdings, Inc. shares were held by 30 hedge funds out of the 910 prominent hedge funds tracked by Insider Monkey, with a total value of $360.9 million.

10. L3Harris Technologies, Inc. (NASDAQ:LHX)

Number of Hedge Fund Holders: 35

L3Harris Technologies, Inc. (NASDAQ:LHX) is a prominent American technology firm, specializing in surveillance solutions, microwave weaponry, and electronic warfare. It was created through the merger of L3 Technologies (previously L-3 Communications) and Harris Corporation on June 29, 2019. Following this merger, it was anticipated to become the sixth-largest defense contractor in the United States.

On August 31, L3Harris Technologies, Inc. announced a quarterly dividend of $1.14 per share, consistent with previous payouts. The dividend was distributed on September 19 to shareholders of record as of September 5.

According to Insider Monkey’s second quarter database, 35 hedge funds were bullish on L3Harris Technologies, Inc., compared to 46 funds in the preceding quarter. Dmitry Balyasny’s Balyasny Asset Management is the leading position holder in the company, with 1.27 million shares worth $250.5 million.

9. Northrop Grumman Corporation (NYSE:NOC)

Number of Hedge Fund Holders: 40

Northrop Grumman Corporation is a major multinational company in the aerospace and defense technology sector. Employing 95,000 people and boasting an annual revenue exceeding $30 billion, it not only stands as one of the globe’s premier manufacturers of weaponry and providers of military technology, but also one of the best defense stocks to invest in.

The Korea Aerospace Industries awarded Northrop Grumman Corporation a contract on October 16 to deliver Airborne Laser Mine Detection System (ALMDS) solutions and technical assistance for the Engineering, Manufacturing, and Design (EMD) stage of the Korean Mine Countermeasures Helicopter (KMCH) program in the Republic of Korea. The EMD phase is projected to conclude in 2027.

According to Insider Monkey’s second quarter database, 40 hedge funds were bullish on Northrop Grumman Corporation, compared to 45 funds in the prior quarter. Donald Yacktman’s Yacktman Asset Management is a prominent stakeholder of the company, with 409,839 shares worth $186.80 million.

Harding Loevner Global Equity Strategy made the following comment about Northrop Grumman Corporation in its Q1 2023 investor letter:

“Our other purchase was Northrop Grumman Corporation, a US defense contractor whose stock price experienced a pullback. We like that Northrop has a larger presence than its rivals in the most favorable subcategories of the defense industry-namely, nuclear weapons, space systems, and what’s known as C4ISR (which stands for Command, Control, Communications, Computers. Intelligence, Surveillance, and Reconnaissance). C4ISR refers to digital systems that translate data picked up from different sensors-such as an incoming hypersonic missile or advancing troops-into a common format, and then escalate key information to the right people These differentiated technologies are especially relevant in a time of increased geopolitical tensions. Northrop also benefits from large barriers to entry in this stable industry, which should enable continued strong earnings and cash flow.”

8. General Dynamics Corporation (NYSE:GD)

Number of Hedge Fund Holders: 46

General Dynamics Corporation (NYSE:GD) is a worldwide enterprise focused on aerospace and defense, organized into four key segments: Aerospace, primarily engaged in business jet manufacturing and related services; Marine Systems, specializing in submarine and ship construction; Combat Systems, dedicated to armored vehicle and weapons production; and Technologies, providing IT and communication solutions.

A total of 46 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in General Dynamics Corporation. The biggest stakeholder of General Dynamics Corporation during this period was James A. Star’s Longview Asset Management, which owns a $6.09 billion stake in the company.

7. KBR, Inc. (NYSE:KBR)

Number of Hedge Fund Holders: 47

KBR, Inc. (NYSE:KNR), formerly known as Kellogg Brown & Root, is a United States-based company that operates in the fields of science, technology, and engineering. KBR is actively involved in diverse markets, including aerospace, defense, industrial, and intelligence.

On October 17, KBR, Inc. (NYSE:KBR) secured a recompeted task order worth $75 million for a five-year duration. The task involves conducting research and analysis focused on critical technology domains for the U.S. Department of Defense (DoD). These domains encompass advanced materials, trusted artificial intelligence (AI) and autonomy, as well as renewable energy generation and storage.

47 out of the 910 hedge funds tracked by Insider Monkey were KBR, Inc.’s investors as of Q2 2023. is the biggest investor among these Benjamin Pass’ TOMS Capital through its $141 million investment.

6. Howmet Aerospace Inc. (NYSE:HWM)

Number of Hedge Fund Holders: 49

Howmet Aerospace Inc. (NYSE:HWM) is a global provider of advanced engineering solutions to the aerospace and transportation sectors. The company is divided into four segments: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels. The Engineered Structures segment specializes in delivering aerospace and defense applications, including titanium ingots, aluminum and nickel forgings, machined components, and assemblies.

On August 1, Howmet Aerospace Inc. released its Q2 results, reporting a non-GAAP EPS of $0.44 and revenue of $1.65 billion. These figures exceeded Wall Street estimates by $0.01 and $40 million, respectively. The company closed the second quarter with a cash balance of $536 million.

According to Insider Monkey’s second quarter database, 49 hedge funds were long Howmet Aerospace Inc., compared to 42 funds in the prior quarter. Paul Singer’s Elliott Management is the largest stakeholder of the company, with 17 million shares worth $847.2 million.

Oakmark Equity and Income Fund made the following comment about Howmet Aerospace Inc. in its Q1 2023 investor letter:

“During the quarter, we eliminated three positions: Howmet Aerospace Inc., Keurig Dr Pepper and LivaNova. Howmet performed well and reached our sell target. This is our second successful investment with CEO John Plant, whom we rank among the top CEOs.”

Howmet Aerospace Inc. joins the ranks of Lockheed Martin Corporation, RTX Corporation, and The Boeing Company as one of the best defense stocks investors should keep note of.

5. Lockheed Martin Corporation (NYSE:LMT)

Number of Hedge Fund Holders: 52

Lockheed Martin Corporation, created through the merger of Lockheed Corporation and Martin Marietta in March 1995, is a global American corporation engaged in aerospace, arms, defense, information security, and technology. Its headquarters are located in North Bethesda, Maryland, in the Washington, D.C. region. The company is structured into four segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space. The stock surged 9% following increased conflicts between Israel and Hamas earlier this October.

Lockheed Martin Corporation (NYSE:LMW) has been awarded a $379 million contract to manufacture eight Sikorsky MH-60R SEAHAWK helicopters in Owego. These helicopters are intended for the Spanish Navy (the Armada), which had previously procured 12 SH-60B aircraft between 1988 and 2001 and recently acquired eight retired SH-60F Seahawk helicopters from the U.S. Navy. The addition of these new helicopters, set to be delivered to Spain by 2027, will expand the operational MH-60R aircraft fleet globally, which includes the U.S. Navy, Australia, Denmark, Saudi Arabia, and India. Deliveries to Greece and South Korea are scheduled to commence in 2024.

According to Insider Monkey’s second quarter database, 52 hedge funds were long Lockheed Martin Corporation, compared to 58 funds in the earlier quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the largest stakeholder of the company, with 791,700 shares worth $364.4 million.

4. HEICO Corporation (NYSE:HEI)

Number of Hedge Fund Holders: 53

HEICO Corporation (NYSE:HEI), an aerospace and electronics firm, produces a range of products utilized in aircraft, spacecraft, defense equipment, medical devices, and telecommunications systems. In May of this year, HEICO Corporation announced its intention to acquire Wencor Group in a deal worth $2.05 billion, aimed at expanding its collection of generic parts. This strategic move aligns with the current trend in North America where airlines and aircraft repair facilities are increasingly turning to used and generic parts to maintain aircraft operations due to supply-chain disruptions affecting the availability of branded parts from companies.

At the end of Q2 2023, HEICO Corporation was held by 53 hedge funds. These funds disclosed positions worth $1.05 billion in the company, up from $1 billion in the previous quarter when 49 hedge funds held stakes in the company. The hedge fund sentiment for the stock is positive. As of the June quarter, Ken Griffin’s Citadel Investment Group is the largest investor in HEICO Corporation and holds a stake worth $102.2 million.

3. RTX Corporation (NYSE:RTX)

Number of Hedge Fund Holders: 56

RTX Corporation, a company specializing in aerospace and defense, provides systems and services to clientele in the global commercial, military, and government sectors. The organization is structured into four key segments: Collins Aerospace, Pratt & Whitney, Raytheon Intelligence & Space, and Raytheon Missiles & Defense.

On July 25, RTX Corporation announced a Q2 non-GAAP EPS of $1.29 and revenue of $18.32 billion, surpassing Wall Street projections by $0.11 and $620 million, respectively.

According to Insider Monkey’s second quarter database, 56 hedge funds were bullish on RTX Corporation, compared to 48 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company, with 2.8 million shares worth $276 million.

Carillon Tower made the following comment about Raytheon Technologies Corporation in its Q3 2022 investor letter:

“Raytheon Technologies Corporation announced strong results led by strength in its commercial segment, but weakness in its defense business led to investor consternation. Management guided to a recovery in this segment, citing both transitory supply chain issues and continued strong demand.”

2. The Boeing Company (NYSE:BA)

Number of Hedge Fund Holders: 57

The Boeing Company is a multinational American corporation that engages in the design, production, and sale of airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles on a global scale. Additionally, the company offers leasing and product support services.

On August 28, TD Cowen analyst Cai von Rumohr increased his price target on The Boeing Company to $260 from $255 while maintaining an ‘Outperform’ rating on the company’s stock.

Insider Monkey’s database of 910 hedge funds shows that 57 hedge funds had stakes in The Boeing Company. The biggest stakeholder of The Boeing Company was Adage Capital Management, which had a $438.60 million stake in the company.

1. TransDigm Group Incorporated (NYSE:TDG)

Number of Hedge Fund Holders: 67

TransDigm Group Incorporated (NYSE:TDG), headquartered in Cleveland, Ohio, is a publicly traded aerospace manufacturing company specializing in the development and production of engineered aerospace components. Established in 1993 through the consolidation of four industrial aerospace firms in a leveraged buyout, the company operates through three main segments: Power & Control, Airframe, and Non-aviation. Serving diverse clientele, TransDigm Group Incorporated provides solutions to engine and power system component suppliers, airlines, third-party maintenance providers, military procurement agencies, and repair facilities.

On August 8, TransDigm Group Incorporated released its financial results for the quarter ending on July 1, 2023. The company posted a non-GAAP EPS of $7.25 and a revenue of $1.74 billion, surpassing Wall Street estimates by $0.85 and $55.16 million, respectively.

According to Insider Monkey’s second quarter database, 67 hedge funds were bullish on TransDigm Group Incorporated, same as the prior quarter. Mark Massey’s AltaRock Partners is the leading stakeholder of the company, with 1.35 million shares worth $1.2 billion.

Baron Small Cap Fund made the following comment about TransDigm Group Incorporated in its second quarter 2023 investor letter:

“We have had some extraordinary winners over time. For instance, we bought DexCom, Inc. at a $950 million market cap in 2012, and it is now valued at $50 billion (the stock has appreciated 41% annually since the Fund’s initial purchase). TransDigm Group Incorporated has grown from $1.1 billion at purchase to $49 billion presently (and the stock has appreciated 29% annually since the Fund’s initial purchase 17 years ago). IDEXX Laboratories, Inc. has gone from $2 billion at purchase to $42 billion over almost 15 years and the stock has appreciated 26% annually during that time frame. The Trade Desk is now valued at $38 billion and was $433 million when we first purchased shares over 6 years ago. The stock has appreciated almost 60% annually since our initial purchase. Pretty amazing. All four stocks have been solid performers this year, contributing nicely to the Fund’s returns.

Since we run a small-cap fund but want to hold on to these great investments as they continue to compound and perform, we reduce the positions sizes over the holding period so that the overall market capitalization of the Fund is palatable. For each of the four stocks mentioned above, we presently own 11% or less of our peak positions. We take the proceeds from the trimming of these positions to fund new small-cap investments, with the hopes of somehow replicating these results.”

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