What is the best defense stock to buy?

There is no single "best" defense stock to buy. The one that's most appropriate for you is one that matches your investment objectives and risk tolerance. For example, some companies are more defensive , slow-growth and pay higher dividends, while others are more aggressive or non-diversified.

Is Lockheed Martin a good stock to buy?

Lockheed Martin is one of the stalwarts of the defense industry, the largest in the world. Analysts expect modest earnings growth next year, and the stock pays a good dividend.

What stocks should you buy if war breaks out?

Defense stocks can rally if a sizable war breaks out, but sometimes the initial spike provides the biggest game. It's important to remember that some defense stocks are well-diversified, with other product lines in their portfolios, so it's important to research which stocks stand to benefit most from particular conflicts.

What industries thrive during war?

Defense stocks are obvious beneficiaries of wartime economies, but depending on the type and nature of the war, other industries can also be winners. Producers of chemicals and basic materials, for example, may also benefit from increased demand during wartime. Precious metals stocks may also rally as investors become more fearful and defensive.

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Best Defense Stocks To Invest in October 2024

September 30, 2024

10 min Read

Written by John Csiszar

Edited by Melanie Grafil

Everett, WA, USA - August 29, 2017: A wide look at a Boeing facility with a visible Boeing sign.

rvolkan / Getty Images

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The defense sector typically sees strong demand for its products and services as the U.S. and other countries continue to upgrade and improve equipment and systems to keep their nations secure. In the current geopolitical climate, demand for the output of defense companies is likely to increase even more as nations support their allies with materiel.

Many defense stocks recently reported their earnings for the second quarter of 2024, and several have exceeded estimates. Here are some of the best defense industry stocks to buy now.

What Are the Best Defense Stocks To Buy?

If you’re looking to add defense sector stocks to your portfolio, these are good options to consider now, based on industry position, valuation, potential growth and analyst expectations.

Boeing Co. (BA)
Lockheed Martin Corp. (LMT)
General Dynamics Corp. (GD)
RTX Corp. (RTX)
Northrop Grumman Corp. (NOC)
CACI International Inc. (CACI)
Textron Inc. (TXT)
Howmet Aerospace Inc. (HWM)
L3Harris Technologies Inc. (LHX)

1. Boeing Co. (BA)

Price: $156.32
Market Cap: $96.33 billion
Dividend Yield: N/A

Boeing Co. develops, manufactures and services commercial and military aircraft, defense products and space systems. The company has customers in over 150 countries and is a top exporter in the United States. Boeing Co. employs over 170,000 people in the U.S. If you’ve flown commercially in the last few decades, you’ve probably flown in a Boeing plane, as the company manufactures the 737, 747, 767, 777 and 787 families of aircraft, among others, and Boeing jetliners comprise almost half the world fleet of commercial jets.

There’s no avoiding the fact that Boeing has had huge problems recently, causing investors to flee from the stock. In 2018 and 2019, two high-profile crashes of its 737 Max jetliners cast doubt on its reputation, and its recent violation of its 2021 settlement could expose it to criminal prosecution for fraud. Over the last five years, its stock has paid the price, dropping 59.60% despite a gain of nearly 37% in 2023.

But in spite of all the bad news, Boeing stock might be presenting an interesting entry point. Fourteen of the 25 analysts tracking the stock have a “strong buy” or “buy” rating on it, with an average price target of $211.76, about 35% above current levels. It remains well below its all-time high of $430.35 set on March 1, 2019, and it had beaten earnings estimates for two quarters in a row before its third-quarter miss.

2. Lockheed Martin Corp. (LMT)

Price: $582.36
Market Cap: $138.81 billion
Dividend Yield: 2.16%

Lockheed Martin Corp. is a security and aerospace company that produces fixed-wing and rotary-wing commercial and military aircraft, autonomous products, air and missile defense products, radar and more. The company employs 122,000 people in over 345 facilities worldwide. Twenty percent of Lockheed Martin employees are veterans.

Lockheed Martin reported Q2 earnings on July 23. The company had net sales of $18.1 billion, up 8% over its $16.7 billion in sales in the same quarter of 2023. Net earnings were $1.6 billion, or $6.85 per share. Lockheed Martin returned $1.6 billion of cash to shareholders in dividends and stock buybacks. The company has beaten earnings estimates four quarters in a row, and analysts have an average 12-month price target of $546.96 on Lockheed Martin stock, with individual analysts’ targets ranging from $405 to $635 per share.

3. General Dynamics Corp. (GD)

Price: $300.13
Market Cap: $82.47 billion
Dividend Yield: 1.89%

General Dynamics Corp. is a global defense and aerospace company that provides products and services in business aviation, ship construction and repair, weapons systems, technology products and services and more. The company employs over 100,000 people around the world.

General Dynamics Corp. reported revenue of $12 billion in the second quarter of 2024, up 20.2% over the same period in 2023. Diluted earnings per share were $3.26, up 20.7% over 2023. The company reported a backlog of $91.3 billion, down from $93.7 billion in the first quarter, and a book-to-bill ratio of 0.8 to 1, meaning it booked $0.80 in new orders for every $1 of revenue in the first quarter.

Of the 22 analysts following the stock, eight have a “strong buy” rating and seven have a “buy” rating. The average price target is $323.16, about 8% above current levels.

4. RTX Corp. (RTX)

Price: $120.39
Market Cap: $160.15 billion
Dividend Yield: 2.09%

RTX Corp. is the aerospace and defense conglomerate that was formed when Raytheon Co. merged with United Technologies Corp. in 2020. The company now operates three divisions: Collins Aerospace, Pratt & Whitney and Raytheon. It officially changed its name to RTX Corp. in July 2023.

RTX Corp. reported its Q2 earnings on July 25, and they were better than expected, as they were for the last four quarters in a row. Overall adjusted profit for the quarter was $1.41 per share, 9% over the prior year. Sales were up 8% versus the prior year, to $19.7 billion. The company reaffirmed its outlook for the coming year and reported a backlog of $206 billion, up from $202 billion last quarter. The stock has done well over the past three years, returning 48.56%, perhaps one of the reasons that 16 out of 27 analysts have a current “hold” rating on RTX.

5. Northrop Grumman Corp. (NOC)

Price: $526.79
Market Cap: $77.04 billion
Dividend Yield: 1.56%

Northrop Grumman Corp. builds advanced aircraft like the B-2 Spirit stealth bomber; provides full-spectrum cyber to secure military communications; provides logistics, sustainment and modernization services to emergency services and the military; designs, develops and produces naval systems; is a pioneer in space exploration; and more. The company employs 100,000 people and operates in all 50 states and more than 25 countries around the world.

In its Q2 2024 quarterly results, reported July 25, Northrop Grumman reported $10.2 billion in sales, compared with $9.6 billion in the same period in 2023. Operating income rose 13%. Diluted EPS for the quarter was at $6.36, an increase of 19%, and the company returned $2.34 billion to shareholders via dividends and share repurchases.

Northrop has beaten earnings estimates for four quarters in a row, and 10 of the 19 analysts following it have a “buy” or “strong buy” rating on it, with an average price target of $526.65 — nearly unchanged from current levels.

6. CACI International Inc. (CACI)

Price: $499.96
Market Cap: $11.15 billion
Dividend Yield: N/A

CACI International Inc. provides technology and expertise to U.S. government customers for national security. The company’s business units comprise Cyber and Space, Digital Solutions, Engineering Services, Enterprise IT, and Mission Support. CACI International employs 24,000 people and is headquartered in Reston, Virginia.

CACI International reported its fourth fiscal quarter 2024 results on June 30, announcing revenues of $1.7 billion, up 19.7% from the same period a year earlier. Net income was $107.8 million and adjusted diluted earnings per share were $5.30, up 24.7% year-over-year. The company reported contract awards of $14.2 billion in the quarter and a book-to-bill ratio of 1.9 to 1.

The stock has provided gangbuster returns over the past one-, three- and five-year periods of 61.64%, 95.71% and 113.80%, respectively. Analysts see another gain of about 1.40% in the stock over the next 12 months, to $507.

7. Textron Inc. (TXT)

Price: $87.75
Market Cap: $16.44 billion
Dividend Yield: 0.09%

Textron is a more diversified company than some of the defense businesses on this list, as it operates in six divisions: Bell, Textron Aviation, Textron eAviation, Industrial, Textron Systems and Finance. Its Aviation and Systems divisions design, build and support military aircraft, and its Bell division also produces helicopters.

In Textron’s Q2 2024 earnings release, the company reported adjusted EPS of $1.35, up from $1.30 the prior year. The company returned $358 million to shareholders via share repurchases. The stock has returned 9.19% year to date, and analysts expect gains of more than 15% in the year ahead.

8. Howmet Aerospace Inc. (HWM)

Price: $99.21
Market Cap: $40.49 billion
Dividend Yield: 0.32%

Howmet Aerospace has been on fire by nearly all metrics. Over the past one-, three- and five-year periods, the stock has returned 117.30%, 217.68% and 281.60%, respectively, and it has topped earnings expectations over the past four quarters in a row.

The company is a bit different from some of the other defense stocks on this list, as rather than creating aircraft or weapons, it engineers metal products for the aerospace, defense and space industries. Specifically, Howmet makes titanium aero ingots and mill products, along with multi-material structures for aircraft.

Twenty-one of 24 analysts covering the stock have “buy” or “strong buy” ratings on it, with an average price target 3% above current levels.

9. L3Harris Technologies Inc. (LHX)

Price: $234.99
Market Cap: $44.58 billion
Dividend Yield: 1.97%

L3Harris Technologies and its 46,000 employees develop end-to-end solutions connecting air, land, sea, space and cyber domains. These include missile systems, intelligence and reconnaissance, optical sensors, precision munitions and much more.

In the company’s Q2 2024 earnings release on July 25, L3Harris Technologies reported revenue of $5.3 billion, up 13% on a year-over-year basis. Earnings came in at $1.92 per share, beating estimates by $0.06. The company also bumped up EPS guidance for the coming year from a range of $12.70 – $13.05 to $12.85 – $13.15.

Fourteen of 25 analysts following the stock have a “buy” or “strong buy” rating on L3Harris stock, with an average price target of $252.30.

Pros and Cons of Defense Stocks

Before investing in defense stocks, you should consider both the pros and cons.

Pros

Defense will always be an important part of American government spending.
Defense stocks often pay solid dividends.
Shares generally have lower volatility and can be defensive bets against the overall stock market.

Cons

Defense stocks tend not to rally as sharply during boom periods in the overall market.
The stocks are slower growth than many other companies.
Defense companies can be affected by changes in government policy.

Alternative Ways To Invest in Defense Stocks

If you want to invest in military defense stocks but don’t want to choose a single company to buy, you can buy an exchange-traded fund that will mimic the return of the defense sector overall. Here are two to consider.

Invesco Aerospace & Defense ETF (PPA)

Invesco Aerospace & Defense ETF is an exchange-traded fund with over 90% of its holdings in stocks that comprise the index. Its top five holdings, in order, are RTX Corp., Lockheed Martin, Boeing, General Electric and Northrop Grumman. Together, these stocks make up about 35% of the ETF.

SPDR S&P Aerospace & Defense ETF (XAR)

SPDR S&P Aerospace & Defense ETF is 100% invested in industrial stocks and has $2.33 billion in net assets. Its top five positions, none of which totals more than 5% of total holdings, are GE Aerospace, Curtiss-Wright Corp., Howmet Aerospace Inc., TransDigm Group Inc. and Axon Enterprise Inc.

FAQ

Here are the answers to some of the most frequently asked questions regarding defense stocks.

What is the best defense stock to buy?
- There is no single "best" defense stock to buy. The one that's most appropriate for you is one that matches your investment objectives and risk tolerance. For example, some companies are more defensive, slow-growth and pay higher dividends, while others are more aggressive or non-diversified.
Is Lockheed Martin a good stock to buy?
- Lockheed Martin is one of the stalwarts of the defense industry, the largest in the world. Analysts expect modest earnings growth next year, and the stock pays a good dividend.
What stocks should you buy if war breaks out?
- Defense stocks can rally if a sizable war breaks out, but sometimes the initial spike provides the biggest game. It's important to remember that some defense stocks are well-diversified, with other product lines in their portfolios, so it's important to research which stocks stand to benefit most from particular conflicts.
What industries thrive during war?
- Defense stocks are obvious beneficiaries of wartime economies, but depending on the type and nature of the war, other industries can also be winners. Producers of chemicals and basic materials, for example, may also benefit from increased demand during wartime. Precious metals stocks may also rally as investors become more fearful and defensive.

Karen Doyle and Daria Uhlig contributed to the reporting for this article.

Data is accurate as of Sept. 29, 2024, and is subject to change.

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