-4.01%
last session
LMT fell 4% amid a broader market rally, but analysts note its strong dividend growth and potential undervaluation;...
Sourcezacks.com - Jun 18
Defense Stocks
DefenseIndustrialsTechnology
Prime contractors, defense IT, advanced military technology, and aerospace components with long-duration government backlogs. The universe is dominated by Defense Primes (53%) and Components & Specialty (21%), underperforming SPY by 4.2 percentage points YTD.
YTD Return
+5.1%
-4.2 pts vs SPY
11 of 31 beat SPY
1-Month Return
+1.8%
+1.3 pts vs SPY
Universe Size
32 Stocks
Curated theme basket
Market Cap
$1.77T
Total capitalization
Theme Performance
Defense Stocks Performance vs SPY and QQQ
Track Defense Stocks without checking every day
Weekly updates on performance, valuation changes, and key movers.
Theme Composition
Defense Stocks Breakdown
Composition last reviewed
As of Jun 1, 2026
Categories reflect each company's primary theme role. Some companies may have exposure to multiple segments.
Theme Overview
Defense Stocks Overview
A summary of how the theme breaks down across business segments and where concentration risk lives.
Selected Stocks
32
in theme
Total Market Cap
$1.77T
combined
Highly Concentrated
The top 2 segments (Defense Primes & Components & Specialty & Defense IT & Services & Next-Gen Defense Tech) represent 73.7% of this theme by market cap.
Top Defense Stocks Stocks
Top Defense Stocks Stocks by Segment, Performance, and Valuation
PLTR
Palantir Technologies Inc.
Price$128.47
Mkt Cap-
YTD-23.5%
Rev G67.7%
RTX
RTX Corporation
Price$185.60
Mkt Cap-
YTD-0.9%
Rev G10.6%
BA
The Boeing Company
Price$222.72
Mkt Cap-
YTD-2.2%
Rev G32.7%
HON
Honeywell International Inc.
Price$229.01
Mkt Cap-
YTD+16.9%
Rev G-6.3%
LMT
Lockheed Martin Corporation
Price$510.95
Mkt Cap-
YTD+2.8%
Rev G4.6%
HWM
Howmet Aerospace Inc.
Price$277.66
Mkt Cap-
YTD+31.2%
Rev G14.2%
GD
General Dynamics Corporation
Price$350.01
Mkt Cap-
YTD+1.9%
Rev G9.3%
TDG
TransDigm Group Incorporated
Price$1,328.31
Mkt Cap-
YTD-2.2%
Rev G11.7%
NOC
Northrop Grumman Corporation
Price$521.50
Mkt Cap-
YTD-11%
Rev G5%
RKLB
Rocket Lab USA, Inc.
Price$107.24
Mkt Cap-
YTD+41.1%
Rev G45.8%
| # | Chart (YTD) | |||||||
|---|---|---|---|---|---|---|---|---|
| 1 | PLTR Palantir Technologies Inc. | $128.47 | $294.39B | -23.5% | -4.9% | 203.9 | 67.7% | |
| 2 | RTX RTX Corporation | $185.60 | $249.94B | -0.9% | +5.5% | 37.4 | 10.6% | |
| 3 | BA The Boeing Company | $222.72 | $175.57B | -2.2% | +1% | 89.8 | 32.7% | |
| 4 | HON Honeywell International Inc. | $229.01 | $145.11B | +16.9% | +5.4% | 31.1 | -6.3% | |
| 5 | LMT Lockheed Martin Corporation | $510.95 | $117.75B | +2.8% | -3.3% | 23.8 | 4.6% | |
| 6 | HWM Howmet Aerospace Inc. | $277.66 | $111.09B | +31.2% | +8% | 74.8 | 14.2% | |
| 7 | GD General Dynamics Corporation | $350.01 | $94.65B | +1.9% | +2% | 22.6 | 9.3% | |
| 8 | TDG TransDigm Group Incorporated | $1,328.31 | $75.01B | -2.2% | +12.3% | 41.4 | 11.7% | |
| 9 | NOC Northrop Grumman Corporation | $521.50 | $74.07B | -11% | -5.2% | 17.9 | 5% | |
| 10 | RKLB Rocket Lab USA, Inc. | $107.24 | $62.07B | +41.1% | -18.3% | -289.8 | 45.8% |
Showing 10 of 32 stocks
Daily Intelligence
Yesterday in Defense Stocks
Key headlines and stock-level catalysts from the last trading session.
Markets closed - showing last session.
The next recap publishes after Jun 22, 2026 market close.
Session Brief
Jun 19, 2026Defense stocks face mixed outlook. Lockheed Martin and Parsons are trading below intrinsic value after recent price dips, offering buying opportunities. Honeywell’s aerospace spinoff and General Dynamics show strong growth prospects from new contracts and technology upgrades.
Key Drivers
Stock-Level Catalysts
Sentiment reflects catalyst narrative, not price direction - a stock can close lower while the fundamental driver is bullish.
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last session
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-4.76%
last session
PSN fell 4.8% today but remains undervalued with a GF score of 81/100. Recent contract win for its cyber and electr...
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last session
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Updated after market close
Jun 19, 2026
Valuation Pulse
Are Defense Stocks cheap or expensive right now?
DCF valuations and Wall Street ratings across the theme.
Data as of Jun 21, 2026 (EOD)
32 stocks in theme - 31 with full coverage
DCF Valuation
(Intrinsic Value)31
of 32
covered
Undervalued
9(29%)
Fair Value
9(29%)
Overvalued
13(42%)
Top DCF Upside (Undervalued Only)
View all
Wall Street Consensus
(Price Targets)32
of 32
covered
Buy / Strong Buy
25(78%)
Hold
7(22%)
Sell / Strong Sell
0(0%)
Coverage Snapshot
Consensus is based on 32 stocks with analyst price targets. DCF analysis is based on 31 stocks with intrinsic value estimates.
Valuation Distribution
(32 covered stocks)Theme Valuation Score
2.4
Cheap
Scale: 1 (Cheap) to 5 (Expensive)
1
Bargain
12 stocks (38%)
>= +30%
2
Cheap
6 stocks (19%)
+10% to +30%
3
Fair
6 stocks (19%)
-10% to +10%
4
Expensive
6 stocks (19%)
-25% to -10%
5
Very Expensive
2 stocks (6%)
<= -25%
Valuation score blends Wall Street target upside at 65% weight and DCF upside at 35% weight when both are available; single-source covered stocks use the available signal. Higher score means more expensive.
Earnings Calendar
Upcoming Earnings in Defense Theme
Companies reporting in the next 30 days. Earnings dates and estimates can change as reports approach.
| Company | Reports | Timing | Est. EPS | Est. Revenue |
|---|---|---|---|---|
 AVAVAeroVironment, Inc. | Tue, Jun 23 | Unconfirmed | $1.47 est. | $557M est. |
| AVAVAeroVironment, Inc. | Mon, Jun 29 | Unconfirmed | $1.47 est. | $557M est. |
Estimates are based on available consensus data. BMO = Before Market Open, AMC = After Market Close.
Research & Methodology
How to evaluate Defense Stocks
Methodology, investment thesis, and key risks for this theme.
Show DetailsHide Details
Research & Methodology
How to evaluate Defense Stocks
Methodology, investment thesis, and key risks for this theme.
How we evaluate these stocks
Our methodology
We separate prime contractors, defense technology, aerospace suppliers, shipbuilders, and space or cybersecurity crossovers. The focus is backlog quality, program exposure, margins, and capital returns.
- Defense revenue must be material to the thesis
- Backlog and funded contract visibility matter
- Program concentration is reviewed carefully
- Margins and free cash flow support dividends and buybacks
- Geopolitical demand is weighed against valuation
Investment thesis
Why this theme exists
Defense spending is driven by national security priorities, geopolitical risk, and long procurement cycles. The best companies combine mission-critical programs with cash flow and pricing discipline.
- Rising geopolitical tension supports defense budgets
- Missiles, air defense, drones, and electronic systems are priority areas
- Prime contractors have long-cycle revenue visibility
- Defense technology can grow faster from a smaller base
- Cash returns can support total shareholder return
Key risks
What could go wrong
Defense stocks are not immune to political, execution, and valuation risk. Budget delays, program overruns, supply-chain issues, or margin resets can hurt even high-quality contractors.
- Budget timing can delay revenue recognition
- Fixed-price contracts can pressure margins
- Program concentration can create earnings shocks
- Supply-chain and labor constraints can delay deliveries
- Premium valuations can fade if budget growth slows
FAQ
Frequently asked questions
Common questions investors have about the Defense Stocks theme.
01What are defense stocks?
Companies whose revenue is primarily driven by government defense spending. The sector includes prime contractors (RTX, LMT, NOC), defense IT firms (PLTR, LDOS), specialty component makers (HWM, TDG), and next-gen tech companies bringing drones, AI, and space capabilities to the military.
02What are the best defense stocks to buy?
Depends on your goal. RTX and Lockheed Martin (LMT) are the two largest primes with diversified exposure. Northrop Grumman (NOC) dominates stealth and space. General Dynamics (GD) leads on capital returns. For growth, Palantir (PLTR) is the leading defense AI platform and Kratos (KTOS) leads in tactical drones.
03Lockheed Martin vs RTX — which is the better defense stock?
Lockheed is the largest pure-play defense company and runs the F-35 program. RTX is more diversified with defense systems plus Pratt & Whitney commercial engines. Lockheed outperforms when defense budgets dominate the narrative; RTX outperforms when commercial aerospace is strong. Compare their margins and yields in the table.
04How does the defense budget affect defense stocks?
The US defense budget is the single largest driver of defense stock revenue. It has grown from ~$700B in 2020 to over $900B with bipartisan support. When the budget grows, contractors see larger contract pools and expanding backlogs. The February budget request and fall appropriations create a predictable catalyst calendar.
05Are defense stocks recession-proof?
Among the most recession-resistant equities. Government defense spending is independent of the economic cycle — DoD does not cut fighter jet production when GDP slows. During 2008 and 2020, defense budgets grew while other sectors contracted. The primes maintained revenue, margins, and dividends through both recessions.
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