In this article, we will list the 5 Best Mid Cap Defense Stocks to Buy. Please visit 8 Best Mid Cap Defense Stocks to Buy if you’d like to see an extended list and the methodology behind it.
5. Mercury Systems, Inc. (NASDAQ:MRCY)
Number of Hedge Fund Holders: 32
Mercury Systems, Inc. (NASDAQ:MRCY) is among the 8 Best Mid Cap Defense Stocks to Buy, with 32 hedge funds holding a stake in the company as per Insider Monkey’s database for Q1 2026.
Shares have surged 44% year-to-date as of the close on June 24, making it one of the best-performing defense stocks so far in 2026. However, that appears to have limited its upside potential as Wall Street analysts have a Moderate Buy rating on MRCY and see a downside of 6%.
Recent updates include William Blair analyst Jonathan Ho, who on June 5 reiterated the firm’s Buy rating, according to a report on TipRanks.
Earlier on June 1, Jefferies lifted its price target on Mercury Systems, Inc. (NASDAQ:MRCY) to $105 from $95 and maintained a Hold rating. The adjustment came after the firm’s meeting with senior company leaders.
Jefferies noted record bookings in recent quarters and expects Mercury’s gross margins to improve as low-margin backlog rolls off. Moreover, the firm anticipates growth opportunities ahead from rising budgets and the Golden Domes project.
The aerospace and defense technology company reported robust results for the third quarter of fiscal 2026, with revenue organically increasing 11.5% year-over-year to $236 million. Adjusted EPS came in at 27 cents, up from 6 cents during the same quarter last year. It ended the quarter with a record backlog of $1.6 billion, up 17.9% from the prior year.
Mercury Systems, Inc. (NASDAQ:MRCY) provides mission-critical processing that enhances the accessibility of advanced technologies for complex aerospace and defense missions.
4. V2X, Inc. (NYSE:VVX)
Number of Hedge Fund Holders: 34
V2X, Inc. (NYSE:VVX) is among the 8 Best Mid Cap Defense Stocks to Buy. As of the close of business on June 24, the stock is a Moderate Buy based on the recommendations from 10 analysts and has an average share price upside potential of 8%.
Recent updates include Raymond James, which downgraded VVX to Market Perform from Outperform on Wednesday. The firm cited valuation concerns as the reason behind the adjustment.
In a research note to investors, the analyst noted the robust share price gains in 2026, while adding that there is limited potential for multiple expansion ahead. The firm believes the stock offers a balanced risk/reward at the moment. Raymond James further said that the revision was in no way tied to the company’s upcoming quarterly results.
Earlier on May 29, BofA lifted its price target on the stock to $93 from $78 and reiterated a Buy rating. The adjustment came following the company’s first-quarter earnings report.
According to TipRanks, a BofA analyst told investors that the results reflect V2X, Inc.’s (NYSE:VVX) ‘unique position to support operational tempo worldwide’. The firm further said that it was increasing estimates for the company and anticipates upside potential as military expenditure rises.
On the other hand, investors’ sentiment towards the stock remains steady. According to Insider Monkey’s database for Q1 2026, 34 hedge funds held a stake in the company, up from 33 in the prior quarter.
The company reported strong results for the first quarter of fiscal 2026, with revenue growing 23% year-over-year to $1.25 billion. Adjusted diluted earnings per share were posted at $1.53, up 55% from the previous year. Total backlog at the end of the quarter stood at a record $13.8 billion, helped by 50 awards amounting to $4.1 billion in Q1.
V2X, Inc. (NYSE:VVX) provides innovative solutions and support services that integrate the digital and physical environments. It is an important player in the defense sector, providing vital mission solutions to customers in around 47 countries worldwide.
3. AeroVironment, Inc. (NASDAQ:AVAV)
Number of Hedge Fund Holders: 37
AeroVironment, Inc. (NASDAQ:AVAV) is among the 8 Best Mid Cap Defense Stocks to Buy based on hedge fund sentiment. According to Insider Monkey’s database for Q1 2026, 37 hedge funds held a stake in the company.
On June 23, BTIG analyst Andre Madrid slashed the price target on the stock to $205 from $330, while maintaining a Buy rating.
The firm noted several reasons for the adjustment, including the Space Force’s termination of the contract covering the Satellite Communications Augmentation Resource (SCAR) program, a reduction in new contract awards, and lower margins for its Space, Cyber, and Directed Energy business.
Despite BTIG’s price target reduction, the overall sentiment around the stock remains bullish. As of the close of business on June 24, Wall Street has a Strong Buy rating on AeroVironment, Inc. (NASDAQ:AVAV) with an average share price upside potential of 75%.
In other news, earlier this month, the global defense technology leader signed an MOU with Taiwan-based Ubiqconn Technology Inc. to collaborate on developing a common controller ecosystem to support the modernization of the country’s defense systems and indigenous unmanned aircraft systems program.
AeroVironment, Inc. (NASDAQ:AVAV) designs and manufactures unmanned aerial vehicles, ground robotic systems, and loitering munitions.
2. Astronics Corporation (NASDAQ:ATRO)
Number of Hedge Fund Holders: 42
Astronics Corporation (NASDAQ:ATRO) is among the 8 Best Mid Cap Defense Stocks to Buy. As of the close of business on June 24, the stock is a Strong Buy with an average share price upside potential of 21%.
On May 28, TD Cowen analyst Gautam Khanna lifted the firm’s price target on the stock to $100 from $85 and maintained a Buy rating. The adjustment came after the company was awarded a long-awaited order from the Army for the TS-4549/T Radio Test Sets Program.
A day earlier, Astronics Corporation (NASDAQ:ATRO) announced that Astronics Test Systems had received a purchase order from the Army for the program. The order will cover deliveries over the next 20 months and is valued at $44.7 million.
Through this order, a full-rate production stage of the TS-4549/T Radio Test Sets Program has been initiated. The company had originally received an IDIQ contract for the program back in June 2024. It was funded at $215 million, of which $145 million now remains.
Last month, the company reported robust results for the first quarter of 2026, with sales growing 12% year-over-year to $230.6 million. Net income per diluted share was logged at $0.67, improving from $0.26 in the prior year’s period. Moreover, Astronics ended the quarter with a record backlog of $734.3 million.
Astronics Corporation (NASDAQ:ATRO) provides advanced technologies to global aerospace, defense, and electronics clients. Some of its offerings include lighting and safety systems, aircraft electronics integration, automated test systems, and distribution and motion systems, among other products and services.
1. Karman Holdings Inc. (NYSE:KRMN)
Number of Hedge Fund Holders: 43
Karman Holdings Inc. (NYSE:KRMN) is among the 8 Best Mid Cap Defense Stocks to Buy. Institutional investors’ interest in the stock continues to grow. According to Insider Monkey’s database for Q1 2026, 43 hedge funds held a stake in the company, up from 36 at the end of the fourth quarter of 2025.
Wall Street also remains bullish with a Strong Buy rating and an average share price upside potential of 120%, as of the close of business on June 24.
Recent updates include RBC Capital, which reiterated its Outperform rating and $100 price target on June 1. The adjustment came after the company provided an operational data update tied to its second offering and stated that its active pipeline had tripled from the end of Q1 2025 to approximately $3 billion as of May 25, 2026.
Karman Holdings Inc. (NYSE:KRMN) further added that the pipeline could yield more than half of the opportunity in defense program contracts related to hypersonics & strategic missiles, tactical missiles & integrated defense, maritime security, and space and launch initiatives.
In other news, the company reported record quarterly revenue of $151.2 million in Q1, representing a 51% year-over-year increase. Earnings per fully diluted share came in at $0.06, improving from a loss of $0.04 during the same period last year. Backlog grew 61% from the prior year to finish the quarter at $1 billion.
Following the results, management raised its revenue outlook to $720 to $735 million and its adjusted EBITDA outlook to $208.5 to $219.5 million.
Karman Holdings Inc. (NYSE:KRMN) is engaged in the design and development of vital system solutions for missile defense, satellite, spacecraft, launch vehicles, hypersonic, and unmanned aerial systems.
While we acknowledge the potential of KRMN 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 KRMN and that has 100x upside potential, check out our report about the cheapest AI stock.
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