We recently published an article titled Why These Defense Stocks Are Gaining This Week. In this article, we are going to take a look at where Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) stands against the other defense stocks.
The Ukraine crisis has taken an unexpected turn following a heated exchange at the Oval Office between Ukrainian President Volodymyr Zelensky and US Vice President J.D. Vance on Friday, which ended with President Trump berating the visiting leader. Defense stocks wobbled after the contentious meeting as investors anticipated the US-Ukraine minerals deal to be signed.
READ ALSO: 10 Best Large Cap Defense Stocks to Buy Now and Why These 15 Defense Stocks Are Skyrocketing So Far In 2025.
The defense sector in the US has so far struggled under Trump’s second term as president, amid mixed statements on military expenditure throughout his campaign and the early days of the new stint. Shares fell sharply on February 13 after the US president suggested the country could rapidly cut military spending in the future.
The creation of DOGE is also reshaping investors’ views of the sector. According to a Financial Times report on February 24, shares of the six largest American defense companies have fallen 4% since Trump’s return to the White House. In contrast, Europe’s top defense stocks have risen by nearly 40% over the same period.
European defense stocks have rallied over the past two weeks as governments faced pressures to increase military expenditure. Several stocks recorded double-digit growth on Monday, March 3, a day after the European Summit in London where leaders from the EU and NATO met to express their support for Ukraine, following the recent Zelenskyy-Trump spat.
The momentum has further picked up after a conservative victory in Germany, signaling the shift to the right in Berlin. A Reuters report on Sunday stated that parties in talks to form the country’s next government are already considering setting up a defense fund.
Peter Schaffrik, Global Macro Strategist, at RBC Capital Markets stated the following on the ongoing situation:
“It is an inflection point and Europe realises it needs to do the heavy lifting. The German elections have opened the door for more spending. The whole Zelenskiy-Trump meltdown has fast forwarded everything.”
Let’s now head over to the list of defense stocks that are gaining this week. Please note that the stocks listed are based on one week’s performance. Our analysis does not reflect the prospects of the company. Their share price could go high or low in the future, depending on the external market conditions, industry-specific challenges, and the company’s capabilities. Additional research and caution are advised before making investment decisions.
Methodology
For this article, we went through screeners to see how stocks in the aerospace and defense industry performed over the past week. From there, we picked the top 10 stocks with the highest percentage gains in share price during this period. All data is as of the close of business on Monday, March 3, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician in a laboratory carrying out research and development of microwave electronics.
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)
Weekly Gains: 6.64%
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) develops and fields transformative and affordable products and platforms for national security needs. It is involved in various technological areas, such as unmanned systems, C5ISR, satellite communications, warfighter training, and combat systems.
During its Q4 2024 earnings call on February 26, the company announced a 9.1% organic growth in revenue for the full year. Another key highlight was over $45 million in cash flow from operations generated during the fourth quarter. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) also beat quarterly profit estimates and reported impressive book-to-bill ratios for Q4 and the full year.
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) expects an organic revenue growth of 10% in fiscal 2025, and between 13%-15% for 2026. While the stock has had a monthly fall of nearly 22%, it has shown signs of recovery over the past week, with gains of 6.64%, helped by strong quarterly results.
Overall KTOS ranks 7th on our list of the defense stocks that are gaining this week. While we acknowledge the potential of KTOS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KTOS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.