8 Best Defense Contractor Stocks to Buy Right Now

In this article, we will discuss the 8 Best Defense Contractor Stocks to Buy Right Now.

Global defense stocks are on the spot as the dramatic military escalation in the Middle East shows no signs of abating. While the sector has been a rare bright spot, the US and Israel launching widespread attacks and Iran embarking on retaliatory attacks have propelled the sector amid concerns over how long the conflict will drag on.

Whereas the conflict has triggered uncertainty in equity markets, there is renewed focus on companies likely to benefit from it.

“It’s very much one of uncertainty at the moment that investors are grappling with,” said Patrick O’Donnell, Chief Investment Strategist at Omnis Investments. Equity markets are a little bit more uncertain about just how long this is going to drag on, for the implication for both growth and inflation that it will have the longer that it goes on.”

Defense companies are attracting interest from Wall Street Strategists as governments around the globe respond to geopolitical tensions. The prospects of governments hiking defense spending are one factor that underlines the renewed attention on some of the big players in the defense sector.

The war dragging on for a long time would lead to a significant depletion of America’s missile stockpile, which would need to be replenished. In the first four days of the conflict, close to $11 billion was spent, including some $5.7 billion of interceptors to shoot down Iranian missiles and drones.

While the U.S. defense budget for the current fiscal year is a record $1 trillion, it is expected to rise. Likewise, European members that raised their military spending targets to 5% of GDP may also be forced to hike. The expected surge in defense spending would be a boon for companies with products and services in the sector.

As defense budgets soar, let’s take a look at some of the best defense contractor stocks to buy right now to ride the wave.

Our Methodology

To compile a list of the best defense contractor stocks to buy right now, we screened for companies operating in the defense sector. We then narrowed our list to companies with significant business and a record of winning big defense contracts. We trimmed the list further by focusing on stocks with upside potential of more than 5% and that are popular among elite hedge funds in the fourth quarter of 2025. Finally, we ranked the stocks based on their upside potential.

Note: Stock Upside Potential Data is Based on Information as of March 24.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).

Best Defense Contractor Stocks to Buy Right Now

8. Lockheed Martin Corporation (NYSE:LMT)

Stock Upside Potential: 9.13%

Number of Hedge Fund Holders: 59

Lockheed Martin Corporation (NYSE:LMT) is one of the best defense contractor stocks to buy right now. On March 25, 2026, Lockheed Martin and the Department of War announced a framework agreement to accelerate production of Precision Strike Missiles (PrSM). Building on last year’s $4.94 billion Army contract, the new plan will quadruple PrSM capacity, ensuring the U.S. maintains a decisive edge.

Lockheed Martin is leveraging advanced technologies and its industrial base to deliver faster, more efficient production, while also creating thousands of skilled American jobs. The agreement could expand into a multi‑year deal lasting up to seven years, pending congressional approval.

PrSM, designed to replace the Army Tactical Missile System, offers extended range, improved lethality, and versatile deployment. The missile made its combat debut earlier in March during Operation Epic Fury, proving its deep‑strike capability.

Lockheed Martin has invested over $7 billion since 2017 to expand production of priority systems, including $2 billion dedicated to munitions. With more than 115,000 square feet of operations space and 400 employees already supporting PrSM, the company is scaling rapidly. CEO Jim Taiclet emphasized that Lockheed Martin is committed to delivering advanced precision fires to meet operational demand and strengthen U.S. deterrence against emerging threats.

On March 23, Sikorsky, a Lockheed Martin company, announced it had successfully tested and delivered the U.S. Army’s experimental UH-60MX Black Hawk helicopter fitted with its MATRIX autonomy suite.

The testing and delivery mark an important milestone in the pursuit of an open-architecture mission, supporting autonomy and piloted flight. The integration of the MATRIX Suite enhances mission effectiveness and survivability of warfighters. The suite also enables automated landing zone detection and obstacle avoidance to enable safe operations.

Additionally, the Lockheed Martin suite enables real-time terrain and obstacle awareness to help pilots and autonomous systems avoid threats. The open architecture on offer will reduce maintenance hours and pilot workload, allowing them to focus on mission-critical decisions.

Lockheed Martin Corporation is a premier global aerospace, defense, and technology company primarily focused on researching, designing, developing, and manufacturing advanced technology systems, products, and services.

7. Northrop Grumman Corporation (NYSE:NOC)

Stock Upside Potential: 9.91%

Number of Hedge Fund Holders: 62

Northrop Grumman Corporation (NYSE:NOC) is one of the best defense contractor stocks to buy right now. On March 19, Northrop Grumman’s Talon IQ testbed completed its first partner mission autonomy flight using Shield AI’s Hivemind software.

The aircraft successfully carried out combat air patrol and target engagement maneuvers before switching back to Northrop Grumman’s Prism autonomy system. This flight showed how Talon IQ’s open, plug‑and‑play design can host third‑party AI platforms while meeting U.S. Government standards for secure and reliable defense technology. The test also proved that new AI software can move quickly from lab testing to real flight, cutting costs and speeding innovation.

Leaders from both companies said the collaboration highlights how Talon IQ enables rapid scaling of mission autonomy and provides a strong environment for advancing unmanned flight capabilities. Talon IQ, built on Scaled Composites’ Model 437 aircraft, is part of Northrop Grumman’s Project Talon portfolio and is designed to accelerate modular autonomy solutions.

Shield AI’s Hivemind software acts like a human pilot, allowing unmanned systems to sense, decide, and act in complex missions. Together, the demonstration showed how open architectures and advanced AI can bring autonomous flight closer to operational use, supporting future defense needs with speed, flexibility, and reliability.

Northrop Grumman Corporation is a leading global aerospace and defense technology company that designs, develops, and manufactures advanced systems, including military aircraft (B-21 Raider), autonomous drones, space systems (satellite components, Artemis boosters), cybersecurity tools, and missile defense systems.

6. Honeywell International Inc. (NASDAQ:HON)

Stock Upside Potential: 13.42%

Number of Hedge Fund Holders: 79

Honeywell International Inc. (NASDAQ:HON) is one of the best defense contractor stocks to buy right now. On March 25, Honeywell International Inc. announced a supplier framework agreement with the U.S. Department of War to expand production of defense technologies.

The multi‑year deal, valued at $500 million, will boost capacity for navigation systems, Assure actuators, and electronic warfare solutions, critical components used in precision munitions, missiles, and U.S. military aircraft. Honeywell Aerospace is among the first Tier 1 suppliers to sign such an agreement, underscoring its role in strengthening defense readiness. CEO Jim Currier highlighted the company’s ability to scale advanced technologies quickly, delivering lasting benefits to both customers and taxpayers.

On March 20, Honeywell International Inc. raised its debt tender offer to $4.67 billion from $3.75 billion. Honeywell received $7.21 billion in tenders for its dollar securities and €2.60 billion for its euro securities by the deadline. It plans to accept all euro securities tendered within priority levels 1 through 6, with final amounts to be announced after the reference yield date.

The tender covers 17 series of dollar notes maturing between 2029 and 2054, and 7 series of euro notes maturing between 2027 and 2036. The largest submissions included $1.21 billion for 5.250% dollar notes due 2054 and €456.6 million for 3.500% euro notes due 2027. Withdrawal rights expired on March 18, and the tender offers are set to close on April 7, 2026, unless extended.

Honeywell International Inc. operates across aerospace technologies, industrial automation, building automation, and energy solutions worldwide. Most importantly, it is a major defense contractor through its Aerospace Technologies division, supplying avionics, navigation systems, radar, propulsion engines, and electronic warfare solutions for U.S. and allied military platforms.

5. L3Harris Technologies, Inc. (NYSE:LHX)

Stock Upside Potential: 14.80%

Number of Hedge Fund Holders: 48

L3Harris Technologies, Inc. (NYSE:LHX) is one of the best defense contractor stocks to buy right now. On March 24, L3Harris Technologies, Inc. began high‑volume production of its VAMPIRE counter‑drone systems in Huntsville, Alabama to meet growing demand from the U.S. and allies facing persistent drone threats.

The facility features flexible assembly, testing, and installation areas that allow VAMPIRE to be integrated onto vehicles and containerized weapon systems, with capacity to scale as needed. Company leaders emphasized the urgency of delivering these combat‑proven systems quickly to protect lives. VAMPIRE has already been used successfully in European operations since 2023, and in 2025, L3Harris expanded the family to include land, maritime, air, and electronic warfare variants.

On March 18 at the JPMorgan Industrials Conference 2026, L3Harris Technologies outlined its strategic growth plans for the year.

At the top of the list is the planned initial public offering of the company’s Missile Solutions segment, as the company also eyes investments across various sectors to unlock growth opportunities. L3Harris Technologies is currently working on regulatory compliance as it seeks to close the IPO in the second half of the year.

In addition, the company plans to become the largest supplier of solid rocket motors. It already boasts a $20 billion pipeline, including $2 billion in contracts in South Korea. It has also inked a deal with a NATO ally as a customer. L3Harris Technologies projects high teen’s compound annual growth in margins through 2028, driven by revenue doubling.

The company delivered a 3% increase in revenue in 2025 to $21.9 billion, with diluted earnings per share of $10.73. For 2026, the company expects EPS to range between $11.30 and $11.50.

L3Harris Technologies, Inc. is a major American aerospace and defense contractor that provides advanced technology solutions across air, land, sea, space, and cyber domains. It specializes in tactical communications, electronic warfare, night vision equipment, and integrated mission systems (ISR) for government and commercial customers worldwide.

4. RTX Corporation (NYSE:RTX)

Stock Upside Potential: 16.70%

Number of Hedge Fund Holders: 79

RTX Corporation (NYSE:RTX) is one of the best defense contractor stocks to buy right now. On March 13, RTX secured a $2.01 billion contract modification from the US Air Force. The contract covers work on the Advanced Extremely High Frequency (AEHF) terminal system.

AEHF is a satellite communications system that delivers secure, jam-resistant communications for high-priority military assets. The modification is poised to increase the total value of the original contract signed in 2021 to $2.97 billion from $960 million. RTX is to conduct operations under the modification contract at the Marlboro, Massachusetts, and Largo, Florida, facilities.

The $2.01 modification contract comes on the heels of the US Navy awarding RTX a $498 contract last year for the production, testing, and delivery of fully integrated Navy Multiband terminals.

RTX has also confirmed that it has completed the expansion of its Redstone Raytheon Missile Integration facility. Completion of the 26,000-square-foot expansion follows a $115 million capital investment and is poised to increase the facility’s capacity by more than 50%.

RTX Corporation is a premier global aerospace and defense company that provides advanced systems to commercial, military, and government customers. It produces advanced weapons systems, such as the Tomahawk Land Attack Missile and the Patriot air defense system.

3. Leidos Holdings, Inc. (NYSE:LDOS)

Stock Upside Potential: 30.49%

Number of Hedge Fund Holders: 37

Leidos Holdings Inc. (NYSE:LDOS) is one of the best defense contractor stocks to buy right now. On March 11, Leidos Holdings Inc. announced it is poised to modernize the US Air Force Cloud One Platform to enhance the deployment of secure cloud capabilities.

Under a $454.9 million contract, the company is to work with Amazon Web Services, Azure, Google Cloud Platform, and Oracle Cloud Infrastructure to transform the Air Force’s multi-cloud environment. The modernization drive seeks to boost security, increase automation, and simplify day-to-day operations to help the US Air Force deploy mission-critical operations faster. Leidos Holdings joins the fray as a trusted partner, owing to its edge in delivering innovative solutions that support the Air Force’s transition to the cloud.

Earlier on March 10, Leidos entered into a strategic partnership with Dropzone AI to help federal agencies respond to cyber threats faster and with less training. The two are to deploy agentic artificial intelligence to help handle routine cyber investigations, to allow humans to focus on more complex and critical threats.

Leidos Holdings, Inc. is a technology company that provides scientific, engineering, and enterprise IT solutions primarily to U.S. federal agencies, including the Department of Defense and homeland security. It focuses on defense, intelligence, civil, and health markets, offering services such as AI, cybersecurity, digital modernization, and software development.

2. Rocket Lab Corporation (NASDAQ:RKLB)

Stock Upside Potential: 31.23%

Number of Hedge Fund Holders: 45

Rocket Lab Corporation (NASDAQ:RKLB) is one of the best defense contractor stocks to buy right now. On March 23, Rocket Lab Corporation inked a $190 million contract for HASTE launches. It represents the single largest launch contract in the company’s history, bringing the total launch backlog to more than 70.

Under the $190 million contract, the company is to support the US Department of Defense’s initiative to accelerate hypersonic flight testing. The test flights are to occur over a four-year period. The multi-year launch partnership builds on the company’s success in delivering high-cadence hypersonic capabilities at scale.

The company continues to assert its commercial responsiveness and precision that hypersonic programs demand, with a 100% mission success rate across all HASTE launches. It has already sold 28 new launches in Q1 2026, almost as many as it sold last year. The exponential growth underlines Electron’s role as the small launch vehicle of choice for commercial, civil, and defense missions.

Rocket Lab Corporation provides defense services as a prime contractor for the U.S. Space Development Agency (SDA), designing and manufacturing 18 missile-tracking satellites. It specializes in launching rapid-response satellites via Electron rockets, conducting hypersonic test flights (HASTE), and supplying military-grade space systems.

1. AeroVironment Inc. (NASDAQ:AVAV)

Stock Upside Potential: 46.89%

Number of Hedge Fund Holders: 40

AeroVironment, Inc. (NASDAQ:AVAV) is one of the best defense contractor stocks to buy right now. On March 23, analysts at BTIG reiterated a Buy rating on AeroVironment, Inc. and a $330 price target.

The positive stance is in response to the company receiving two firm-fixed-price contracts. Under the $117 million contract, the company is to deliver P550 long-range reconnaissance uncrewed aerial vehicles (UAVs) to the US Army. The contract includes finding unmanned aerial systems, battery chargers, ground control stations, launchers, and training materials.

The Red Dragon contract seeks to support the Army’s Long Range Reconnaissance program and represents the first contract for the company’s one-way platform. AeroVironment’s management is confident the platform will scale to Switchblade-like levels by the end of the decade.

According to BTIG, the latest contract underlines momentum across the company’s Autonomous Systems segment. Earlier in the month, the company secured a $97.4 million contract under the U.S. Army’s Aviation and Missile Technology Consortium (AMTC). The contract is for the development and delivery of a Generative Environment for the Next Era of Spectral Imaging Stimulators (GENESIS).

AeroVironment Inc. is a leading defense technology company specializing in intelligent, multi-domain robotic systems, including small unmanned aircraft systems (UAS), tactical missile systems, and unmanned ground vehicles.

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