In this article, we will list the 5 Best Mid-Cap Defense Stocks to Invest In. Please visit 7 Best Mid-Cap Defense Stocks to Invest In if you’d like to see an extended list and how we came up with it.
5. Loar Holdings Inc. (NYSE:LOAR)
Number of Hedge Fund Holders: 33
Loar Holdings Inc. (NYSE:LOAR) is among the 7 Best Mid-Cap Defense Stocks to Invest In. Based on the recommendations of three analysts, the stock is a Strong Buy with an average share price upside potential of 30% as of the close on April 10.
Pixabay/Public Domain
Recent updates include Citigroup analyst John Godyn, who on April 2 cut the firm’s price target on the stock to $71 from $83 and maintained a Buy rating. The bank said it had revised estimates and price targets for stocks in the aerospace and defense sector as part of its Q1 preview.
Institutional interest in Loar Holdings Inc. (NYSE:LOAR) is continuing to increase, with Insider Monkey’s database for Q4 2025 showing 33 hedge funds having a stake in the company, up from 29 in the prior quarter.
In other news, the company reported record results for fiscal 2025, with net sales surging 23.2% year-over-year to $496.3 million. Net income climbed from $22.2 million in the prior year to $72.1 million, with adjusted earnings per share for the full year increasing 147.6% to $1.04.
Moreover, to account for the impact of the recent acquisitions of Harper Engineering and LMB Fans & Motors, management revised its guidance upward for net sales, adjusted EBITDA, and adjusted EBITDA margin, while lowering its outlook for net income and diluted EPS for the year.
Loar Holdings Inc. (NYSE:LOAR) designs and supplies niche aerospace and defense components for aircraft and aerospace and defense systems. The company has a robust network of relationships with original equipment manufacturers across the aerospace and defense sector.
4. Mercury Systems, Inc. (NASDAQ:MRCY)
Number of Hedge Fund Holders: 34
Mercury Systems, Inc. (NASDAQ:MRCY) is among the 7 Best Mid-Cap Defense Stocks to Invest In. On April 7, Jefferies trimmed its price target on the stock to $80 from $85, as part of an adjustment to its Q3 estimates. The firm maintained its prior Hold rating.
As of the close of business on Friday, the stock is a Moderate Buy with an average share price upside potential of 15% based on the recommendations of seven analysts.
Last week, the company secured a contract from L3Harris to supply solid-state data recorders (SSDRs) for the Space Development Agency’s Tranche 3 Tracking Layer satellite constellation.
This follows Mercury Systems, Inc. (NASDAQ:MRCY)’s data recorder deliveries in the past for Tranche 0 and Tranche 1 constellations, and the recent provision of SSDRs for Tranche 2 satellites to L3Harris.
Earlier in March, Mercury announced that it was acquiring SolderMask to aid in higher-rate production across key programs. The firm is known for its prowess in dry film solder mask applications, which are used across several Mercury initiatives, including the Army’s Lower Tier Air and Missile Defense Sensor (LTAMDS) program.
Mercury Systems, Inc. (NASDAQ:MRCY) provides mission-critical processing that helps enhance the accessibility of advanced technologies used in complex aerospace and defense missions. The stock has gained 9% so far in 2026.
3. AAR Corp. (NYSE:AIR)
Number of Hedge Fund Holders: 36
AAR Corp. (NYSE:AIR) is among the 7 Best Mid-Cap Defense Stocks to Invest In. On April 9, KeyBanc lifted its price target on the stock to $132 from $120, while reiterating an Overweight rating.
According to TipRanks, the firm noted a significant uptick in aerospace OEM orders, with production levels now stabilizing and supplier inventories suggesting ongoing restocking to support ramps.
KeyBanc analyst Michael Leshock described the aerospace and defense aftermarket as tight, indicating increased fleet life. He also highlighted that the conflict in the Middle East augurs well for defense demand, but warned that the resulting oil crisis could pressure air travel.
As of the close of business on April 10, AAR Corp. (NYSE:AIR) is a Strong Buy based on the recommendations from six analysts. The stock has a one-year average share price target of $131.20, representing an upside of 9%.
In other news, late last month, the company said it had secured two pallet contracts from the U.S. Air Force with a combined value of $450 million. This includes a $160 million agreement to provide repair services for the 463L Legacy Cargo Pallet, and a $290 million contract to manufacture 463 legacy air cargo pallets.
AAR Corp. (NYSE:AIR) is an aerospace and defense aftermarket solutions company that supports commercial and government clients through its wide network of operations spread across 20 countries. It operates through four segments: Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services.
2. AeroVironment, Inc. (NASDAQ:AVAV)
Number of Hedge Fund Holders: 40
AeroVironment, Inc. (NASDAQ:AVAV) is among the 7 Best Mid-Cap Defense Stocks to Invest In. On April 7, the company announced that its UES division had received a three-year, $25 million contract from the U.S. Air Force to mature human health and performance technologies from research to operational use.
Under the agreement, the defense technology firm will transition technologies that have remained mainly in mid-stage development to field deployment with the aim of strengthening the capabilities of warfighters.
According to the press release, the program will focus on four main areas of sensor systems, diagnostic tools, AI or machine learning-enabled databases, and emerging biotechnology platforms.
In other news, AeroVironment, Inc. (NASDAQ:AVAV) continues to remain on analysts’ radar and currently sports a Strong Buy rating. As of the close on April 10, it has an average share price upside potential of 69%.
Recent updates include one from Raymond James, which on March 23 upgraded the stock to Market Perform from Underperform. The firm’s analyst, Brian Gesuale, noted the steep pullback in the share price last month and said that the underperformance and multiple contraction had resulted in a balanced risk-reward dynamic.
AeroVironment, Inc. (NASDAQ:AVAV) designs and manufactures unmanned aerial vehicles, ground robot systems, and loitering munition systems. The stock is down 26% year-to-date.
1. Astronics Corporation (NASDAQ:ATRO)
Number of Hedge Fund Holders: 43
Astronics Corporation (NASDAQ:ATRO) is among the 7 Best Mid-Cap Defense Stocks to Invest In. According to Insider Monkey’s database, 43 hedge funds held a stake in the company as of Q4 2025, an increase from 37 at the end of the prior quarter, suggesting growing institutional interest in the stock.
ATRO remains on analysts’ radar and has a Strong Buy rating, with an average share price upside potential of 32% as of the close of business on April 10.
Last month, Astronics Corporation (NASDAQ:ATRO) was chosen by Boeing to provide fuel tank access doors for the 737 MAX, building on a long-lasting partnership with the aircraft manufacturer across several platforms. Production work on the agreement will take place in Clackamas, Oregon, where the company has manufactured a broad range of technical products over the years.
In other news, the company posted a strong end to 2025 with fourth-quarter revenue increasing 15.1% year-over-year to $240.1 million. Consolidated net income per share came in at $0.78, improving from a net loss of $0.08 per share in the prior year. Astronics ended the year with a record backlog of $674.5 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.
While we acknowledge the potential of ATRO 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 ATRO and that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: 12 Best Aerospace Stocks to Buy Right Now and Donald Trump Stock Portfolio: 8 Stocks Owned by the President.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email below.
