In this article, we will list the 5 Undervalued Aerospace and Defense Stocks to Buy. Please visit 10 Undervalued Aerospace and Defense Stocks to Buy if you would like to see the extended list and the methodology behind it.
5. StandardAero, Inc. (NYSE:SARO)
Forward P/E: 16.57
Stock Upside Potential: 30.16%
Number of Hedge Fund Holders: 41
StandardAero, Inc. (NYSE:SARO) is an undervalued aerospace and defense stock to buy. On May 7, StandardAero, Inc. (NYSE:SARO) delivered impressive first-quarter 2026 results, with double-digit revenue growth across all end markets. The solid start to the year also saw the company enjoy sustained growth in commercial aerospace amid accelerated bookings momentum in the military end market.
Revenue in the quarter was up 13.3% to $1.63 billion, driven by strong demand for services and products across all three major end markets. The Business Aviation end market was up 19.6% as the Commercial Aerospace end market grew 11.4%. Amid robust revenue growth, net income rose 27% year over year to $79.9 million, up from $62.9 million in the same quarter last year.
The better-than-expected first-quarter results came as the Repair Service segment delivered double-digit adjusted EBITDA growth, demonstrating an attractive margin profile. StandardAero also strengthened its CRS offering with the acquisition of Unified Turbines, which adds hot section component repair capabilities.
According to chief executive officer Russell Ford, the company is positioned to perform across a range of economic environments owing to robust demand, a diversified end-market mix, and a leading position in critical engine platforms.
StandardAero, Inc. (NYSE:SARO) is one of the world’s largest independent providers of aerospace engine maintenance, repair, and overhaul (MRO) services, specializing in fixing engines, components, and airframes for commercial, military, and business aviation.
4. Northrop Grumman Corporation (NYSE:NOC)
Forward P/E: 18.61
Stock Upside Potential: 30.97%
Number of Hedge Fund Holders: 62
Northrop Grumman Corporation (NYSE:NOC) is an undervalued aerospace and defense stock to buy. On May 11, Northrop Grumman Corporation (NYSE:NOC) reiterated its push for opportunities around space missions with the unveiling of a positioning and navigation system.
LR-450 is the company’s new system designed to provide spacecraft tracing and orientation capabilities. The system does not require satellite signals; it uses millihemispherical resonant gyroscopes to measure rotation and orientation. The company resorted to much smaller sensors than those used in the Spacecraft Stellar Inertial Reference Unit.
The unveiling of the tracking system comes on the heels of Northrop Grumman’s HRG technology accumulating more than 70 million hours in orbit. The technology has also been used in missions, including the James Webb Space Telescope.
The LR-450 is poised to operate for millions of hours while supporting various missions ranging from low Earth orbit to planetary exploration. Its lower power requirement will support integration in various spacecraft configurations.
Northrop Grumman Corporation (NYSE:NOC) is a leading global aerospace and defense technology company, focused on developing advanced systems for the U.S. military and its allies. It specializes in aeronautics, space systems, defense systems, and cybersecurity, including the B-2 Spirit bomber, satellites, autonomous drones, and missile defense technologies.
3. Embraer S.A. (NYSE:EMBJ)
Forward P/E: 15.92
Stock Upside 32.96%
Number of Hedge Fund Holders: 35
Embraer S.A. (NYSE:EMBJ) is an undervalued aerospace and defense stock to buy. On May 11, Reuters reported that Embraer S.A. (NYSE:EMBJ) is in talks with Colombia and Chile to sell them its C-390 military transport aircraft.
The company has been stepping up output as it seeks to meet growing demand abroad. By targeting other Latin American nations, Embraer SA also hopes to take on competitors in the sector, such as Lockheed Martin, through foreign sales.
In Latin America, it faces significant headwinds stemming from the long timelines required to complete sales campaigns, driven by budget approvals and procurement processes. Nevertheless, the company could reach a deal more quickly in Colombia, as the country’s president, Gustavo Petro, is trying to modernize the military fleet.
In addition to pursuing sales opportunities in Latin America, Embraer SA has also inked an order of up to 20 C-390s from the United Arab Emirates. It marks the first sale in the Middle East, fuelled by the recent US-Iran War.
Embraer S.A. (NYSE:EMBJ) is a major Brazilian aerospace conglomerate that designs, manufactures, and sells aircraft for commercial, defense, and executive use, and provides after-sales services and support. As the third largest producer of civil aircraft in the world—after Boeing and Airbus—the company focuses heavily on regional, high-performance jets.
2. AAR Corp. (NYSE:AIR)
Forward P/E: 19.65
Stock Upside Potential: 41.88%
Number of Hedge Fund Holders: 36
AAR Corp. (NYSE:AIR) is an undervalued aerospace and defense stock to buy. On May 12, AAR Corp. (NYSE:AIR) hosted an Investor’s Day, during which top executives outlined the company’s strategy, growth initiatives, and financial targets.
The management team reiterated that the company remains focused on delivering parts, repair, and software for the global aviation aftermarket. They also reaffirmed fourth-quarter and fiscal 2026 guidance. Fourth-quarter sales are expected to grow between 19% and 21%, underpinned by 6% to 8% organic sales growth. Adjusted operating margin is expected to range between 10.2% and 10.5%.
For the full year, AAR Corp. (NYSE:AIR) expects sales to grow between 17% and 19%, and adjusted organic sales to grow between 11% and 12%. The company boasts an impressive record of strong financial performance, with sales growing at a compound annual rate of more than 15% since 2022. Adjusted EBITDA has also expanded by over 26% to $376 million as of the third quarter of fiscal 2026. Adjusted earnings per share have also increased at a compound annual growth rate of 19% since 2022.
AAR Corp. (NYSE:AIR) is a leading independent aerospace and defense aftermarket services provider that specializes in maintenance, repair, and overhaul (MRO), parts supply, and integrated solutions for commercial airlines and government fleets. Headquartered near Chicago, they improve aircraft availability and reduce global ownership costs.
1. Cadre Holdings, Inc. (NYSE:CDRE)
Forward P/E: 18.70
Stock Upside Potential: 75.67%
Number of Hedge Fund Holders: 15
Cadre Holdings Inc. (NYSE:CDRE) is one of the undervalued aerospace and defense stocks to buy. On May 11, Cadre Holdings Inc. (NYSE:CDRE) delivered solid first-quarter 2026 results, including a record backlog.
Backlog in the quarter rose to $355 million, up from $166 million at the start of the year. The significant increase was attributed to the blast attenuation seat contract award and the TYR acquisition. The company also recorded strong demand in duty gear and armor. Cadre Holdings is also seeing strong and recurring demand for its suite of leading mission-critical safety products amid heightened geopolitical tensions and increased defense spending.
First-quarter net sales soared to $155.4 million from $130.1 million in the first quarter of 2025. The increase was due to recent acquisitions, offset by timing-related fluctuations in orders. Gross profit increased to $60.2 million from $56.1 million a year ago. On the other hand, net income dropped to $2 million, compared to $9.2 million in Q1 2025, due to higher compensation, interest, and transaction expenses.
For the full year, Cadre Holdings expects net sales to range between $736 million and $758 million, with adjusted EBITDA between $136 million and $141 million.
Cadre Holdings, Inc. (NYSE:CDRE) is a leading global manufacturer and distributor of safety and survivability equipment for law enforcement, first responders, and military personnel, focused on body armor, duty gear, and explosive ordnance disposal (EOD) tools.
While we acknowledge the potential of CDRE 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 CDRE and that has 100x upside potential, check out our report about the cheapest AI stock.
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