With wars actively being waged in several parts of the world right now – and the prospect for additional conflicts looking more and more likely – the global uncertainty stands to have a huge impact on the stock market.
In prior decades, the potential for war typically saw an increase in investors looking for larger defense contractors.
But given the changes in technology – and how those changes have impacted the way wars are being fought – smaller companies that supply surveillance and military equipment have become much sought-after.
As we continue to follow the conflicts unfolding in Ukraine and the Middle East, it’s also important to look more closely into those companies who are best-positioned to help investors protect and grow their wealth in turbulent times.
What follows is a list of five defense-oriented stocks that appear poised for significant growth in the months ahead.
As always, be sure to do your own due diligence before investing in any stock to make sure it’s right for your financial situation and that it is consistent with your acceptable level of risk.
1. Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS)
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, products, system and software company addressing the defense, national security, and commercial markets.
Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field solutions that address its customers’ mission critical needs and requirements.
The company offers microwave electronic products, space and satellite communications, cybersecurity/warfare products, hypersonic and missile defense systems, rockets, training solutions, turbine and engine propulsion technologies, and defense and rocket support services, as well as command, control, communication, computing, combat, intelligence surveillance and reconnaissance systems.
It also provides unmanned aerial systems, and unmanned ground and seaborne products, as well as related command, control, and communications systems, as well as directed energy products.
The company primarily serves national security related agencies, the U.S. Department of Defense, intelligence agencies and classified agencies, international government agencies, and commercial customers.
2. Rocket Lab USA, Inc. (Nasdaq: RKLB)
Rocket Lab USA, Inc. (Nasdaq: RKLB) is an end-to-end space company with an established track record of mission success.
The company delivers reliable launch services, satellite manufacture, spacecraft components, and on-orbit management solutions that make it faster, easier, and more affordable to access space.
Headquartered in Long Beach, California, Rocket Lab designs and manufactures the Electron small orbital launch vehicle, the Photon satellite platform, and the Company is developing the large Neutron launch vehicle for constellation deployment.
Since its first orbital launch in January 2018, Rocket Lab’s Electron launch vehicle has become the second most frequently launched U.S. rocket annually and has delivered 172 satellites to orbit for private and public sector organizations, enabling operations in national security, scientific research, space debris mitigation, Earth observation, climate monitoring, and communications.
Rocket Lab’s Photon spacecraft platform has been selected to support NASA missions to the Moon and Mars, as well as the first private commercial mission to Venus.
Rocket Lab has three launch pads at two launch sites, including two launch pads at a private orbital launch site located in New Zealand and a third launch pad in Virginia.
According to analysts’ consensus price target of $7.88, Rocket Lab USA has a forecasted upside of 67.9% from its current price of $4.69.
3. Ducommun Incorporated (Nasdaq: DCO)
Ducommun Incorporated (Nasdaq: DCO) delivers value-added innovative products and manufacturing solutions to customers in the aerospace, defense and industrial markets.
Founded in 1849, the Company specializes in two core areas – Electronic Systems and Structural Systems – to produce complex products and components for commercial aircraft platforms, mission-critical military and space programs, and sophisticated industrial applications.
The Electronic Systems segment provides cable assemblies and interconnect systems; printed circuit board assemblies; higher-level electronic, electromechanical, and mechanical components and assemblies, as well as lightning diversion systems; and radar enclosures, aircraft avionics racks, shipboard communications and control enclosures, printed circuit board assemblies, cable assemblies, wire harnesses, interconnect systems, lightning diversion strips, surge suppressors, conformal shields, and other assemblies.
It also supplies engineered products, including illuminated pushbutton switches and panels for aviation and test systems; microwave and millimeter switches and filters for radio frequency systems and test instrumentation; and motors and resolvers for motion control. In addition, this segment provides engineering expertise for aerospace system design, development, integration, and testing.
The Structural Systems segment designs, engineers, and manufactures contoured aluminum, titanium, and Inconel aero structure components; structural assembly products, such as winglets, engine components, and fuselage structural panels; and metal and composite bonded structures and assemblies comprising aircraft wing spoilers, large fuselage skins, rotor blades on rotary-wing aircraft and components, flight control surfaces, engine components, ammunition handling systems, and magnetic seals.
It serves commercial aircraft, military fixed-wing aircraft, military and commercial rotary-wing aircraft, and space programs, as well as industrial, medical, and other end-use markets.
Analysts appear bullish on the potential for Ducommon Incorporated, having established a consensus price target of $62.80. That represents a forecast upside of 28.1% from its current price of $49.03.
4. Archer Aviation Inc. (NYSE: ACHR)
Archer Aviation Inc. (NYSE: ACHR) is an urban air mobility company that engages in designs, develops, manufactures, and operates electric vertical takeoff and landing aircrafts to carry passengers.
The company has been partnering with the U.S. Department of Defense since 2021 on a series of projects through the U.S. Air Force’s AFWERX program. The DoD’s goal with this project is to help the AFWERX Agility Prime program assess the transformational potential of the vertical flight market and eVTOL technologies for DoD purposes.
In February 2024 the company announced that it had received its Part 145 certification from the Federal Aviation Administration (FAA).
Under FAA regulations, Archer is now authorized to perform specialized aircraft repair services while maintaining the highest levels of safety and compliance, a key requirement for operating a commercial aviation business.
This certification reinforced Archer’s close collaboration with the FAA and reinforced its progress on the path toward commercial flight operations.
According to analysts’ consensus price target of $9.60, Archer Aviation has a forecasted upside of 90.9% from its current price of $5.03.
5. L3Harris Technologies, Inc. (NYSE: LHX)
L3Harris Technologies, Inc. (NYSE: LHX) is an aerospace and defense company that builds communications, avionics and satellite systems.
Recently, in February 2024, five missile tracking satellites L3Harris Technologies designed and built successfully launched from Cape Canaveral Space Force Station, Florida, as part of the Missile Defense Agency’s (MDA) Hypersonic and Ballistic Tracking Space Sensor (HBTSS) program and the Space Development Agency’s (SDA) Tranche 0 (T0) Tracking Layer program.
L3Harris’ HBTSS satellite is an on-orbit prototype demonstration that can track maneuvering hypersonic missiles flying beyond the range of today’s ballistic missile detection capabilities.
Additionally, it was announced earlier this year that L3Harris received a $919 million contract to develop an 18-vehicle constellation for the SDA’s Tranche 2 Tracking Layer satellite program.
L3Harris Technologies has been the subject of 8 research reports in the past 90 days, demonstrating strong analyst interest in this stock. According to analysts’ consensus price target of $229.00, L3Harris Technologies has a forecasted upside of 7.5% from its current price of $213.05.