The best defense stocks often have strong revenue growth records, competitive operating margins and … [+]
Deloitte’s 2025 Aerospace and Defense Industry Outlook predicts higher defense spending globally, prompted by geopolitical tensions. Additionally, a defense-friendly president has recently moved into the U.S. Oval Office—though some experts wonder if a conflict will arise between President Trump’s pro-defense stance and the Department of Government Efficiency’s spend-cutting aspirations.
If you expect President Trump to add to an already positive outlook for defense spending, you can gain from adding defense exposure to your stock portfolio. Read on for a review of six promising defense stocks for 2025 and beyond.
Methodology Used For These Defense Stock Picks
Established defense companies need a consistent track record of revenue growth plus high operating margins. Consistent revenue growth hints at a high-value product offering and good customer retention. Strong margins allow for financial flexibility and reinvestment into growth initiatives.
These best defense stocks were identified by screening sector stocks on three-year revenue growth performance, number of revenue growth years and operating margins. The criteria are:
- Three-year revenue growth above 5%
- A minimum of three consecutive years of revenue growth
- Operating margins above 10%
Note that the starting point for this screen is defense sector stocks. These companies have been generating a high percentage of sales from defense-related products and services.
In an interview, Arne Noack, regional investment head at Xtrackers, America notes that this backward-looking approach could be limiting. If the stocks on this list don’t serve your needs, look for more options by researching innovative companies with offerings that will serve defense initiatives in the future. For example, the Deloitte outlook predicts technology will reshape many aspects of defense. As an investor, you can gain from that shift with early identification of promising new solutions.
6 Defense Stocks To Buy In 2025
The table below shows six defense stocks meeting the above screening criteria, ordered from highest to lowest operating margin. All six stocks are rated buy or strong buy according to analysts.
Below is a closer look at each of these stocks. Recent earnings metrics are sourced from corporate releases. Analyst forecasts and price targets come from Stockanalysis.com.
For more investing ideas, see best stocks for 2025 and best growth stocks.
1. Transdigm Group (TDG)
- Market Capitalization: $75 billion
- Annual revenue: $7.9 billion
- Three-year revenue growth average: 18.28%
- Years of revenue growth: 3
- Operating margin: 45.30%
- Annual net income: $1.7 billion
Transdigm Overview
Transdigm Group makes aftermarket parts for commercial and military aircraft, ranging from passenger seatbelts to electrical components. The company consists of 50 independently run operating units. Growth is achieved through acquisitions and ongoing development of value-add products.
Why TDG Is A Top Choice
TDG has top margins within the defense space. The fiscal year 2024 operating margin of 45% is impressive relative to competitors and the company’s history. A few years ago, TDG’s operating margin was as low as 35%.
The company’s structure and acquisition prowess are also appealing. With dozens of individual business units serving various niches within aerospace and defense, Transdigm operates almost like a sector fund. The company’s leadership team has also proven its ability to complete accretive acquisitions, which enhances the growth outlook.
Transdigm’s consensus price target is $1,462, or 8.8% higher than the current stock price.
2. HEICO Corporation (HEI)
- Market Capitalization: $33 billion
- Annual revenue: $3.8 billion
- Three-year revenue growth average: 27.40%
- Years of revenue growth: 4
- Operating margin: 21.31%
- Annual net income: $514 million
HEICO Overview
HEICO makes replacement aircraft components and specialty electronics products such as assemblies, memory modules, power suppliers and amplifiers. The company has two reporting segments, Flight Support Group and Electronics Technologies Group.
Like Transdigm, HEICO has used acquisitions to expand its footprint and business results.
Why HEI Is A Top Choice
HEICO’s standout feature is its revenue growth record. Annual sales grew nearly 28% on average between fiscal years 2022 and 2024. The company’s operating margin is lower than TDG’s at about 21%, but it has been consistent for at least seven years. That is impressive, given that HEI has completed more than eight acquisitions in that time.
In fiscal 2024, HEI delivered record revenue and operating income. Chairman and CEO Laurans A. Mendelson cited “exceptional operating performance at the Flight Support Group and notable contributions” from recent acquisitions.
The average analyst price target for HEICO is $270.20, or 14.5% higher than the share price.
3. Curtiss-Wright Corporation (CW)
- Market Capitalization: $13 billion
- Annual revenue: $3 billion
- Three-year revenue growth average: 7.12%
- Years of revenue growth: 3
- Operating margin: 18.59%
- Annual net income: $407 million
Curtiss-Wright Corporation Overview
Curtiss-Wright sells engineered products and services to the aerospace and defense, commercial power, process and industrial markets. The diversified offering includes high-performance radars, hot-air valves for engine propulsion systems and coolant pump technology used in nuclear reactors.
Why CW Is A Top Choice (H3)
Curtiss-Wright regularly beats analysts’ expectations for revenue and earnings. In the last three quarters, the EPS outperformance has averaged over 13%.
The company has strength in the aerospace and defense markets, where third-quarter 2024 sales increased 15% on higher demand for defense electronics and higher submarine and aircraft carrier revenue.
Curtiss-Wright also grew its backlog 16% to $3.3 billion in the first nine months of 2024. The strong year-to-date results prompted an increase to the company’s full-year outlook for revenue, operating income, diluted EPS and free cash flow.
Analysts are targeting a share price of $382.67, or upside of 13%.
4. Woodward (WWD)
- Market Capitalization: $11 billion
- Annual revenue: $3.3 billion
- Three-year revenue growth average: 13.97%
- Years of revenue growth: 3
- Operating margin: 13.24%
- Annual net income: $373 million
Woodward Business Overview
Woodword sells fuel pumps, air valves, thrust reverse actuation systems and other parts used in aircraft, rotorcraft and guided weapons. The company also sells actuators, valves, pumps, electronics and software for industrial applications. Customers are OEMs, suppliers, distributors and contractors.
Why WWD Is A Top Choice
Pure defense sales can be inconsistent, as government budgets change with geopolitical trends. Woodward serves two markets: aerospace and industrial equipment. This provides revenue diversification, which can be helpful if the defense outlook changes.
The broader business model has not been limiting. The company grew fiscal year 2024 sales and adjusted EPS by 14% and 45%, respectively. The performance contributed to a 30% increase in WWD’s stock price over the last 12 months.
Note that management and analysts expect WWD’s fiscal year 2025 sales growth to slow. The average analyst prediction is 3.5% revenue growth in 2025, with an improvement to 8.1% in 2026.
The consensus price target for WWD is $195.38, or 5.25% higher than the current stock price.
5. BWX Technology (BWXT)
- Market Capitalization: $10 billion
- Annual revenue: $2.7 billion
- Three-year revenue growth average: 8.70%
- Years of revenue growth: 8
- Operating margin: 12.70%
- Annual net income: $277 million
BWX Technology Business Overview
BWX designs, makes and sells nuclear components for government and commercial customers. The product offering includes reactors, fuel, proprietary valves and manifolds, steam generators and heat exchangers.
Why BWX Is A Top Choice
The International Atomic Energy Agency (IAEA) says there is global momentum for nuclear expansion. Nuclear energy is gaining popularity as a low-carbon source of electricity. The defense sector also relies on nuclear energy to power highly efficient submarines. IAEA projects world nuclear capacity will more than double by 2050.
Increasing interest in nuclear energy and capacity growth benefit BWX, a leader in naval nuclear reactors and commercial reactor components. BWX is also the only U.S. business licensed to handle special nuclear materials. This licensing provides the company access to high-value programs for the Department of Defense and the Department of Energy.
Analysts have set an average price target of $127.50 for BWX. This is 13.74% higher than the stock’s current price.
If you are interested in targeted energy sector exposure, see this list of best energy stocks for 2025.
6. Cadre Holdings (CDRE)
- Market Capitalization: $2
- Annual revenue: $516 million
- Three-year revenue growth average: 6.16%
- Years of revenue growth: 3
- Operating margin: 11.88%
- Annual net income: $33 million
Cadre Holdings Business Overview
Cadre Holdings makes and sells safety equipment including body armor, blast sensors, bomb suits, forensic products and crowd control products. Customers include state and local law enforcement and federal agencies.
Why CDRE Is A Top Choice
Cadre has built a good business from its portfolio of safety gear brands, with increasing revenue and solid cash flow. Complementary acquisitions have been a key part of the company’s growth.
In the first three quarters of 2024, Cadre increased period-over-period revenues 9.4% despite a tough third quarter. The earnings release identifies “recent acquisitions and higher demand for armor and duty gear products” as key factors.
In January 2025, Cadre announced it would acquire Carr’s Engineering division from Carr’s Group PLC. The brands in this division provide in-demand products and services for nuclear safety and protection. The deal significantly expands Cadre’s total addressable market and client roster. Carr’s high-quality client list and long-term revenue contracts are added highlights.
The consensus price target for Cadre is $39.75, which amounts to 2.8% upside from CDRE’s current stock price.
Bottom Line
The prevailing outlook for the defense sector is positive. If government defense spending is on the rise, targeted investment exposure to this segment can give your portfolio a nice boost. The best defense stocks often have strong revenue growth records, competitive operating margins and a full range of products and services.
