Top 5 Defense Stocks to Watch during a Geopolitical Tension

In times of rising geopolitical tension or outright conflict, defense stocks often outperform the broader market as governments ramp up military spending. Here are the top five defense stocks to consider if a global war scenario emerges, along with key fundamentals and recent performance data.

1. Lockheed Martin (LMT)

Lockheed Martin is the world's largest defense contractor, renowned for the F-35 fighter jet, missile systems, and advanced hypersonic weapons. Its massive $173 billion backlog ensures revenue visibility for years.

Key Fundamentals:

• 2024 Defense Revenue: $64.7 billion

• Q1 2025 Sales Growth: 4% year-over-year

• Backlog: $173 billion (over two years of sales)

• P/E Ratio: ~21x trailing, ~17x forward (below sector average)

• Dividend Yield: Consistent, with $1.5 billion returned to shareholders in Q1 20253

• Stock Price (June 2025): $473.35

• 12-Month Analyst Target: $541.80 (14% upside)

2. Raytheon Technologies (RTX)

Raytheon is a global leader in missile systems (Patriot, Hypersonic Attack Cruise Missile), air defense, and radar. Its products are critical to NATO and U.S. defense strategies, and it's rapidly expanding internationally.

Key Fundamentals:

• 2024 Defense Revenue: $40.6 billion

• 2024 Revenue Growth: 17.15%

• Market Cap: $164.86 billion

• P/E Ratio: 34.86

• Stock Price (June 2025): $142.70

• YTD Stock Gain (2024): +29.64%

• 12-Month Analyst Target: $541.80

3. Northrop Grumman (NOC)

Northrop Grumman is at the forefront of stealth bombers (B-21 Raider), space systems, and autonomous weapons. Despite recent profit headwinds from the B-21 program, its $92.8 billion backlog and international expansion provide strong growth visibility89105.

Key Fundamentals:

• 2024 Defense Revenue: $35.2 billion

• Backlog: $92.8 billion

• Stock Price (June 2025): $507.15

• Q1 2025 Sales: Stable, with international business expected to outpace U.S. sales

• P/E Ratio: Attractively valued compared to sector

• 12-Month Analyst Target: $541.80

4. Rheinmetall (RHM.DE)

Germany's Rheinmetall is Europe's top ammunition and armored vehicle supplier, benefiting from surging European defense budgets and a record €63 billion order backlog. The company expects 25-30% sales growth in 2025 amid Europe's rearmament push111.

Key Fundamentals:

• 2024 Order Backlog: €63 billion (up 57% YoY)

• 2025 Sales Growth Forecast: 25-30%

• Operating Margin (2025E): 15.5%

• Dividend (2024): €8.50/share (up from €5.70)

• YTD Stock Gain (2024): +28%

5. AeroVironment (AVAV)

AeroVironment specializes in tactical drones and loitering munitions (Switchblade), which are in high demand for modern warfare. The company's revenue surged 32.6% in 2024, and it is expanding manufacturing to meet global demand.

Key Fundamentals:

• 2024 Revenue Growth: 32.6%

• Return on Equity (ROE): 3.8% (below industry average, but compensated by high demand)

• Stock Performance (recent): +18% in one month

• Industry Position: Leading U.S. drone supplier

Summary Table

Conclusion

These five defense stocks—Lockheed Martin, Raytheon, Northrop Grumman, Rheinmetall, and AeroVironment—are best positioned to benefit from a surge in global military spending during a potential war. They offer a combination of robust backlogs, strong fundamentals, and exposure to the most in-demand military technologies, making them compelling buys for investors seeking resilience and growth in uncertain times.