Best defense stocks to invest in 2026

The global defense sector continues to gain strength as geopolitical tensions, rising military budgets, and evolving technologies fuel long-term investment appeal. From advanced aerospace systems to AI-powered surveillance and drone solutions, defense stocks are becoming a strategic cornerstone in diversified portfolios.

Next Vision Stabilized Systems is gaining traction with advanced stabilized imaging and electro-optical solutions for drones and defense platforms, providing critical surveillance capabilities to military and security customers worldwide. DroneShield specializes in counter-unmanned aerial system technology and electronic warfare, integrating RF sensing, AI, and sensor fusion to detect and defeat unauthorized drones across complex operational environments. Rheinmetall stands out for its dominant position in European land systems and ammunition supply, delivering proven armored vehicles and munitions that support NATO readiness and long-term modernization programs.

With governments prioritizing modernization and autonomous defense capabilities, 2026 is an ideal time to invest in this sector. These stocks offer both resilience in uncertain times and exposure to advanced technologies shaping the future of global security.

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Before we dive into each company, let`s take a look at how your investment would have performed if you had invested in stocks mentioned in this article.

Now, let`s take a closer look at each of the companies:

• Next Vision Stabilized Systems (TA:NXSN)

  Next Vision Stabilized Systems is an Israeli defense technology company specializing in imaging and surveillance systems for military drones, defense platforms, and security applications. Founded in 2010 and headquartered in Israel, the company is a leading provider of gimbal systems and electro‑optical solutions for defense contractors and military organizations. The company has demonstrated strong growth in defense contracts, especially in imaging technologies for surveillance, reconnaissance, and military tactical operations.

  Its portfolio includes lightweight stabilized cameras for drones, electro‑optical payloads for defense platforms, border surveillance systems, and specialized imaging solutions for military applications. Its products support defense operations including reconnaissance, tactical surveillance, border monitoring, and security systems used by defense forces and allied nations across key regions. With rising focus on unmanned systems and advanced surveillance, Next Vision is positioned to benefit from modernization programs and demand for sophisticated imaging in defense.

  Next Vision Stabilized Systems financial statements

  Analysts recommendation: N/A

  Financial Health

  • Return on assets (ROA): 15.66%
  • Return on equity (ROE): 25.65%
  • Return on investment (ROI): N/A

  Profitability

  • Gross margin: 71.63%
  • Operating margin: 59.82%
  • Net profit margin: 59.53%

  Growth

  • EPS (past 5 years): N/A
  • EPS (current): 3.19
  • EPS estimate (next quarter): N/A
  • EPS growth (this year): 50.3%
  • EPS growth (next year): N/A
  • EPS growth (next 5 years): N/A
  • EPS growth (quarter-over-quarter): N/A
  • Sales growth (past 5 years): N/A
  • Sales growth (quarter-over-quarter): 62.3%

  💡 Why invest in Next Vision Stabilized Systems?

  Next Vision provides stabilized imaging for drones and defense platforms, enabling mission‑critical reconnaissance and surveillance:

  • Defense Imaging Leadership: Next Vision leads in lightweight stabilized imaging systems for military drones and defense platforms, empowering specialized capabilities that command premium pricing in defense markets and secure advantage.
  • Military Modernization Growth: The company benefits from increasing global defense spending on unmanned systems, advanced surveillance technologies, and military modernization programs driven by evolving security threats globally today.
  • Israeli Defense Expertise: Next Vision leverages Israel`s renowned defense technology expertise and established relationships with international defense contractors, providing access to global military markets worldwide today, globally.
  • Specialized Technology Moat: The company`s expertise in electro‑optical systems, gimbal stabilization, and military‑grade imaging creates significant barriers to entry and competitive advantages in defense surveillance for allied customers.

  🐌 Key considerations before investing in Next Vision Stabilized Systems

  Next Vision faces defense budget dependence, niche limits, competition, and scale constraints requiring disciplined execution:

  • Defense Budget Dependency: Heavy reliance on military spending makes the company vulnerable to defense budget cuts, changing procurement priorities, and delays in unmanned systems programs that could impact contract values across regions.
  • Niche Market Limitations: Specialization in defense imaging creates market size constraints and limits growth opportunities compared to broader defense technology companies with diversified portfolios and multiple revenue streams internationally.
  • Defense Technology Competition: The company faces competition from established defense contractors like Lockheed Martin, Raytheon, and specialized imaging companies developing alternative surveillance solutions and technologies across key programs.
  • Small Company Scale: Limited resources compared to large defense contractors may constrain ability to compete for major programs, invest in next‑generation technologies, and maintain required security clearances at scale for alliances.

  Final thoughts on Next Vision Stabilized Systems

  Next Vision`s imaging leadership, defense specialization, and integration with unmanned systems position it strongly in surveillance and reconnaissance for modern military operations. Budget dependence, niche scale, competitive pressure, and program execution risks still require disciplined planning and careful evaluation of defense market dynamics. Like a high‑resolution camera delivering precise intelligence, Next Vision combines technical precision with mission focus to serve allied forces effectively.

• Aryt Industries (TA:ARYT)

  Aryt Industries Ltd. is an Israel-based defense technology company that designs and manufactures electronic fuses and detonators for artillery, armored platforms, and aerospace applications. Founded in 1979, Aryt has evolved through specialization in precision fuze electronics and safety-critical systems for military customers and allied partners. The company benefits from rising modernization programs and sustained demand for mission reliability across munitions and defense platforms globally today.

  Aryt`s operations focus on proximity, time, and programmable fuzes and supporting electronics that meet stringent certification standards for lethality, safety, and interoperability. The company serves Israel`s defense industry and international partners through subcontracting, integration support, tailored engineering, and testing efforts across programs. With mission-critical products aligned to defense procurement cycles, Aryt seeks durable growth through technology upgrades, export opportunities, and portfolio extensions.

  Aryt Industries financial statements

  Analysts recommendation: N/A

  Financial Health

  • Return on assets (ROA): 27.69%
  • Return on equity (ROE): 90.24%
  • Return on investment (ROI): N/A

  Profitability

  • Gross margin: 61.37%
  • Operating margin: 54.67%
  • Net profit margin: 59.31%

  Growth

  • EPS (past 5 years): N/A
  • EPS (current): 1.44
  • EPS estimate (next quarter): N/A
  • EPS growth (this year): 1518.3%
  • EPS growth (next year): N/A
  • EPS growth (next 5 years): N/A
  • EPS growth (quarter-over-quarter): N/A
  • Sales growth (past 5 years): N/A
  • Sales growth (quarter-over-quarter): 430.6%

  💡 Why invest in Aryt Industries?

  Aryt aligns specialized munitions electronics with mission reliability and safety for defense platforms and procurement programs:

  • Defense Fuse Leadership: Aryt specializes in proximity, time, and programmable fuse electronics for artillery and armored platforms, delivering certified performance and reliability that strengthens positioning in defense modernization programs.
  • Proven Military Integration: Established integration with Israeli defense primes and end users enhances validation, lifecycle feedback, and iteration cycles that improve readiness, interoperability, and mission assurance across platform families.
  • Specialized Engineering Expertise: Deep domain knowledge in safety‑critical systems creates barriers to entry, enabling premium pricing for certified solutions and strengthening margins through high‑value electronics for programs and variants.
  • International Market Opportunities: Export channels and subcontracting partnerships provide access to allied markets, increasing demand and enabling growth beyond domestic programs while diversifying revenue sources across contracts.

  🐌 Key considerations before investing in Aryt Industries

  Aryt faces budget dependence, export constraints, product concentration, and certification timelines, creating execution risks:

  • Defense Budget Dependence: Revenue depends on procurement cycles, budget priorities, and program timing, exposing results to policy shifts, election outcomes, and allocation changes that affect volumes and margin cadence across periods.
  • Geopolitical Export Risks: International sales face export controls, end‑use restrictions, and geopolitical tensions that can delay approvals or limit market access, requiring resilient compliance frameworks and diversified relationships.
  • Product Concentration Exposure: Concentration in fuse electronics and limited adjacent scope increases vulnerability to program changes, necessitating portfolio expansion and sustained R&D to broaden demand and reduce single‑line dependence.
  • Technology Certification Timelines: Safety‑critical systems require rigorous qualification and testing cycles that extend development timelines, elevate costs, and create schedule risk for new variants without near‑term production certainty.

  Final thoughts on Aryt Industries

  Aryt Industries' specialization in certified munitions electronics, proven military integration, and export opportunities positions it to benefit from defense modernization and mission readiness priorities. Yet exposure to budget cycles, geopolitical constraints, and product concentration requires prudent planning and portfolio development across markets and platforms. For investors seeking targeted defense electronics exposure, Aryt offers a focused, mission‑critical niche with disciplined growth potential for long‑term portfolios.

• Rheinmetall (DE:RHM)

  Rheinmetall AG is a leading German technology group dedicated to mobility and security, specializing in defense equipment and automotive components. Founded in 1889 and headquartered in Düsseldorf, Germany, the company has evolved through decades of excellence to become central to European defense manufacturing and technology. Rheinmetall serves NATO and allied forces across Europe and beyond through its extensive portfolio of armored vehicles, weapons systems, and ammunition.

  Rheinmetall is a key player in European defense, benefiting from renewed focus on defense capabilities and military modernization across the continent. Its automotive division complements the defense business by providing advanced components to the global vehicle market and supporting efficiency, safety, and electrification initiatives. The group`s dual expertise supports long‑term programs, mission readiness, and industrial capacity across allied nations, enabling sustained modernization and logistics resilience.

  Rheinmetall financial statements

  Analysts recommendation: 1.8

  Financial Health

  • Return on assets (ROA): 6.75%
  • Return on equity (ROE): 22.42%
  • Return on investment (ROI): 8.82%

  Profitability

  • Gross margin: 52.13%
  • Operating margin: 12.16%
  • Net profit margin: 7.64%

  Growth

  • EPS (past 5 years): 26.49%
  • EPS (current): 18.81
  • EPS estimate (next quarter): 2.23
  • EPS growth (this year): 8.5%
  • EPS growth (next year): 56.54%
  • EPS growth (next 5 years): 14.44%
  • EPS growth (quarter-over-quarter): 33.23%
  • Sales growth (past 5 years): 10.88%
  • Sales growth (quarter-over-quarter): 13.3%

  💡 Why invest in Rheinmetall?

  Rheinmetall stands as a pillar of European defense with industrial heritage and modern military relevance across key programs:

  • European Defense Leader: Rheinmetall is a primary beneficiary of increased German and European defense spending, securing major contracts for ammunition, tanks, and air defense systems amidst rising security concerns across priority platforms.
  • Ammunition Market Dominance: As one of the world`s largest producers of large‑caliber ammunition, the company is positioned to meet urgent and sustained demand from NATO stockpiles and allied forces across multiple theaters of operation.
  • Combat Vehicle Excellence: Renowned for the Leopard 2 main battle tank and Puma infantry fighting vehicle, Rheinmetall`s armored systems set standards for ground combat with proven reliability and mission effectiveness in NATO operations.
  • Strong Order Backlog: Record order intake provides multi‑year revenue visibility, driven by long‑term framework agreements with the German Bundeswehr and international customers across Europe, North America, and allied regions consistently.

  🐌 Key considerations before investing in Rheinmetall

  Despite strategic importance, Rheinmetall faces challenges inherent to defense and its dual‑industry structure across regions:

  • Export Control Regulations: Strict German arms export laws can limit sales opportunities to certain non‑NATO countries, potentially hindering market expansion compared to competitors in less regulated jurisdictions globally materially.
  • Automotive Sector Volatility: The automotive division exposes the company to cyclical downturns in the car industry and the challenges of transitioning to electric mobility, potentially weighing on overall margins and returns meaningfully.
  • Supply Chain Pressures: Scaling production to meet surging demand strains supply chains, requiring effective management of raw materials, vendor capacity, logistics constraints, and skilled labor availability across programs globally.
  • ESG Investment Concerns: Despite changing perceptions, some ESG‑focused funds and investors may still exclude defense stocks, potentially limiting the ownership base and valuation premium relative to other industrial peers internationally.

  Final thoughts on Rheinmetall

  Rheinmetall represents a compelling investment in the re‑arming of Europe, backed by dominance in ammunition and armored vehicles and expanding participation in strategic programs. While export restrictions and automotive exposure present risks, the company's central role in German and NATO defense strategies offers a strong growth trajectory. For investors seeking direct exposure to the European defense supercycle, Rheinmetall stands out as a key industrial asset with durable backlog visibility and modernization demand.

• DroneShield (AX:DRO)

  DroneShield is an Australian publicly listed defense technology company specializing in counter‑unmanned aerial system (C‑UAS) solutions and protective electronic warfare capabilities. Founded in 2014 and headquartered in Sydney, the company operates in the United States and United Kingdom and serves customers across more than 70 countries. DroneShield focuses on protecting against unauthorized drone incursions using advanced detection, tracking, neutralization, response, and mitigation technologies for mission‑critical environments.

  The company`s core business develops and manufactures advanced C‑UAS solutions that integrate radio frequency sensing, artificial intelligence, machine learning, sensor fusion, and electronic warfare capabilities. DroneShield`s product portfolio includes devices like the DroneGun Tactical and DroneGun Mk4, designed to detect, track, and neutralize unauthorized drones. These solutions are utilized by military, government, law enforcement, and critical infrastructure entities worldwide to protect against evolving drone threats.

  DroneShield financial statements

  Analysts recommendation: N/A

  Financial Health

  • Return on assets (ROA): -1.29%
  • Return on equity (ROE): 2.22%
  • Return on investment (ROI): N/A

  Profitability

  • Gross margin: 67.62%
  • Operating margin: 1.75%
  • Net profit margin: 5.23%

  Growth

  • EPS (past 5 years): N/A
  • EPS (current): 0.01
  • EPS estimate (next quarter): N/A
  • EPS growth (this year): -82.4%
  • EPS growth (next year): N/A
  • EPS growth (next 5 years): N/A
  • EPS growth (quarter-over-quarter): N/A
  • Sales growth (past 5 years): N/A
  • Sales growth (quarter-over-quarter): 210.1%

  💡 Why invest in DroneShield?

  DroneShield pairs innovation, profitable growth, and domestic manufacturing to deliver resilient, scalable counter‑drone systems:

  • Counter-Drone Market Leadership: As the only publicly listed company globally with a pure-play focus on the counter-drone sector, DroneShield offers unique exposure to this rapidly expanding market with significant growth potential.
  • Strong Financial Turnaround: DroneShield posted its first profitable year with $9.3 million profit and $57.9 million cash, reflecting disciplined execution, cost control, and strengthening unit economics across core counter‑drone programs.
  • Strategic Government Partnerships: The company has secured significant contracts, including a $9.7 million order from a major Latin American military customer and $11.8 million in Asia‑Pacific, driving pipeline visibility and program momentum.
  • Domestic Manufacturing Focus: Prioritizing local production reduces reliance on international supply chains and enhances operational resilience, quality assurance, and delivery certainty amid global uncertainties and supply disruptions.

  🐌 Key considerations before investing in DroneShield

  DroneShield faces contract concentration, regulations, tech rivals, and supply risks, pressuring margins, schedules, and growth:

  • Defense Contract Reliance: A substantial portion of revenue is derived from government and defense contracts subject to budget constraints, policy changes, lengthy procurement cycles, and re‑bid risk that can affect visibility and timing.
  • Regulatory Compliance Complexity: Operating in the defense sector requires export controls, security clearances, and rigorous compliance, with licensing timelines and approvals that can delay schedules and add workload across programs.
  • Competitive Technology Pressure: Despite leadership in counter‑drone technology, competition from defense firms and emerging approaches necessitates innovation investment and accelerating R&D cycles to sustain advantage and partnerships.
  • Supply Chain Risks: Despite local sourcing, critical components like microchips and batteries may require imports, exposing operations to supply chain disruptions, component lead times, and alternate qualification needs for continuity.

  Final thoughts on DroneShield

  DroneShield Limited stands out as a key player in the burgeoning counter‑drone industry, offering innovative solutions to address emerging security threats. Its strong financial performance, strategic contracts, focus on domestic manufacturing, and scalable production capacity position it favorably for future growth. However, potential investors should consider reliance on government contracts, regulatory challenges, and supply chain dependencies when evaluating investment opportunities and program timing.

• Saab (ST:SAAB-B)

  Saab AB is a Swedish defense and aerospace company specializing in fighter aircraft, naval systems, and electronic warfare technologies for global customers. Founded in 1937 and headquartered in Stockholm, Sweden, the company evolved from aircraft manufacturing into a defense technology provider in aviation, submarines, and radar. The company benefits from increased European defense spending and NATO modernization programs amid heightened geopolitical tensions across Northern Europe and the Baltic region.

  Core business includes Gripen fighter aircraft, advanced radar and sensor systems, submarine technologies, missile systems, and integrated command and control solutions. Products support air defense networks, electronic warfare, maritime security, and battlefield management systems used by NATO forces and allied nations. With rising defense spending, Saab is positioned to capitalize on modernization and demand for advanced systems amid evolving security threats across NATO`s eastern flanks.

  Saab financial statements

  Analysts recommendation: N/A

  Financial Health

  • Return on assets (ROA): 3.99%
  • Return on equity (ROE): 13.55%
  • Return on investment (ROI): N/A

  Profitability

  • Gross margin: 22%
  • Operating margin: 8.59%
  • Net profit margin: 7.18%

  Growth

  • EPS (past 5 years): N/A
  • EPS (current): 9.64
  • EPS estimate (next quarter): N/A
  • EPS growth (this year): -1.1%
  • EPS growth (next year): N/A
  • EPS growth (next 5 years): N/A
  • EPS growth (quarter-over-quarter): N/A
  • Sales growth (past 5 years): N/A
  • Sales growth (quarter-over-quarter): 17.2%

  💡 Why invest in Saab?

  Saab shows strengths in Nordic defense innovation and NATO technology leadership globally, backed by programs and partnerships:

  • Nordic Defense Leadership: Saab holds dominant market positions in fighter aircraft, radar systems, and electronic warfare across Northern European defense markets, creating substantial competitive advantages and high barriers to entry.
  • Defense Technology Innovation: The company invests approximately 25% of annual revenue into defense R&D, developing next-generation military technologies in electronic warfare, autonomous systems, and stealth capabilities that enhance effectiveness.
  • NATO Spending Beneficiary: Saab benefits from NATO`s commitment to increase defense spending to 2% of GDP and widespread military modernization programs across European allied nations driven by geopolitical tensions across allied markets.
  • Defense Export Strategy: The company has successfully expanded its global defense footprint beyond Europe with strategic military partnerships in Asia, Middle East, and the Americas, creating diversified revenue streams with regional partners.

  🐌 Key considerations before investing in Saab

  Saab faces European budget volatility, intense competitive pressures, and export restrictions across key markets and programs:

  • European Budget Volatility: Heavy reliance on European defense spending makes the company vulnerable to budget cuts, political changes, and shifts in military priorities that could impact contract values and growth prospects over planning cycles.
  • Defense Sector Competition: Saab faces intense competition from larger defense contractors like Lockheed Martin, BAE Systems, and Thales, which have superior resources, global reach, and established military relationships across major programs.
  • Defense Export Restrictions: As a Swedish defense contractor, Saab faces strict export controls, arms transfer regulations, and potential political restrictions that can limit international sales opportunities under strict controls and treaties.
  • Complex Program Execution: Major defense development programs like fighter aircraft and submarine systems involve significant technical challenges, potential delays, and cost overruns that could impact profitability, requiring management discipline.

  Final thoughts on Saab

  Saab`s leadership in Nordic defense systems and innovation, with strong positioning in European security frameworks, offers opportunities in defense technology growth. However, budget volatility, competition, export restrictions, and complex program execution risks require careful evaluation of specialized defense market dynamics today. Like a radar detecting distant threats, Saab combines technology and strategy to navigate geopolitics while delivering advanced solutions for allied nations.

• Rolls-Royce Holdings (L:RR)

  Rolls-Royce Holdings plc is a British aerospace and defense company that designs, manufactures, and services power systems for global defense applications. Founded in 1906 and headquartered in London, the company is a leading provider of military engines, propulsion systems, and defense technologies for allied customers. The company has shown recovery and growth momentum following strategic restructuring, with expanding defense order books and rising demand for propulsion systems.

  Defense portfolio includes jet engines for the F-35 Lightning II and Eurofighter Typhoon, naval propulsion for submarines and destroyers, and aircraft carrier systems. Rolls-Royce provides land-based power systems for military installations and specialized defense applications across key geographies, supporting resilience and mission readiness. With rising defense spending, the company is positioned to capitalize on modernization programs and demand for next-generation systems across air, sea, and land.

  Rolls-Royce Holdings financial statements

  Analysts recommendation: 2.33

  Financial Health

  • Return on assets (ROA): 5.62%
  • Return on equity (ROE): 5843.65%
  • Return on investment (ROI): -14.18%

  Profitability

  • Gross margin: 25.26%
  • Operating margin: 19.03%
  • Net profit margin: 29.62%

  Growth

  • EPS (past 5 years): N/A
  • EPS (current): 0.68
  • EPS estimate (next quarter): -0.03
  • EPS growth (this year): 282.6%
  • EPS growth (next year): N/A
  • EPS growth (next 5 years): N/A
  • EPS growth (quarter-over-quarter): -76.6%
  • Sales growth (past 5 years): N/A
  • Sales growth (quarter-over-quarter): 7.1%

  💡 Why invest in Rolls-Royce Holdings?

  Rolls-Royce demonstrates compelling strengths in global defense propulsion solutions across diverse military platforms worldwide:

  • Defense Engine Dominance: Rolls-Royce powers critical military aircraft including the F-35, Eurofighter Typhoon, and C-130J, creating decades of predictable aftermarket revenue through maintenance and spare parts across allied fleets.
  • Multi-Domain Defense Portfolio: The company`s defense capabilities span air, sea, and land, including jet engines, naval propulsion systems, and power generation, reducing reliance on a single program and enabling cross-selling opportunities.
  • Strategic Defense Partnerships: Rolls-Royce maintains long-term partnerships with major defense contractors like Lockheed Martin, BAE Systems, and Boeing, ensuring integration into next-generation platforms and early access to opportunities.
  • Advanced Propulsion Technology:: The company leads in developing military propulsion including adaptive cycle engines and hybrid-electric systems, creating opportunities for premium pricing and technology leadership.

  🐌 Key considerations before investing in Rolls-Royce Holdings

  Rolls-Royce faces program concentration, intense competition, and significant technology transition risks across defense markets:

  • Defense Program Concentration: Heavy dependence on major defense programs like the F-35 creates concentration risk, as delays, budget cuts, or cancellations could substantially impact revenue while military priority changes reduce demand.
  • Competitive Defense Market: Rolls-Royce faces intense competition from General Electric, Pratt & Whitney, and Safran, plus emerging technology companies developing alternative propulsion solutions that pressure margins across key programs.
  • Cyclical Recovery Execution: The company must continue executing its transformation strategy while managing challenges of returning to sustainable profitability following financial difficulties and restructuring efforts with disciplined execution.
  • Technology Transition Risk: Rapid technological change toward electric propulsion and autonomous systems could disrupt traditional jet engine markets, requiring substantial investment with uncertain adoption timelines and added development risks.

  Final thoughts on Rolls-Royce Holdings

  Rolls-Royce`s leadership in military propulsion, multi-domain portfolio, and strategic partnerships offers opportunities in the expanding global defense market for investors. However, program concentration, competitive pressure, transformation execution, and technology transitions require careful evaluation of aerospace and defense market dynamics today. Like a pilot navigating turbulence, Rolls-Royce leverages engineering excellence and deep relationships to power through cycles while positioning for long-term success.

• Norbit (OL:NORBT)

  Norbit ASA is a Norwegian technology company specializing in advanced sensor systems, underwater surveillance technologies, and defense solutions for maritime and military applications worldwide. Founded in 1995, the company evolved from a small electronics firm into a leading provider of defense and maritime technologies for NATO allies. The company has demonstrated strong growth in defense contracts, particularly in underwater surveillance systems and maritime security solutions for naval forces.

  The defense portfolio includes advanced sonar for submarine detection, underwater surveillance for naval operations, maritime security solutions, and specialized military sensor systems. Norbit`s products are integral to critical defense infrastructure including naval bases, underwater monitoring networks, and maritime border security systems used by allied forces. Rising focus on maritime security and underwater domain awareness positions Norbit to benefit from naval modernization and demand for advanced underwater surveillance capabilities.

  Norbit financial statements

  Analysts recommendation: 2.1

  Financial Health

  • Return on assets (ROA): 14.49%
  • Return on equity (ROE): 33.01%
  • Return on investment (ROI): 11.2%

  Profitability

  • Gross margin: 58.86%
  • Operating margin: 14.94%
  • Net profit margin: 16.7%

  Growth

  • EPS (past 5 years): 24.8%
  • EPS (current): 6.01
  • EPS estimate (next quarter): 14.2
  • EPS growth (this year): 47.3%
  • EPS growth (next year): 22.4%
  • EPS growth (next 5 years): 19.3%
  • EPS growth (quarter-over-quarter): 31.7%
  • Sales growth (past 5 years): 18.9%
  • Sales growth (quarter-over-quarter): 35.9%

  💡 Why invest in Norbit?

  Norbit shows compelling qualities that make it stand out in its market sector for potential long-term investors comprehensively:

  • Underwater Surveillance Leadership: Norbit leads in advanced sonar and underwater detection technologies for naval forces, creating specialized capabilities that are difficult to replicate and command premium pricing in defense markets.
  • Maritime Security Growth: The company benefits from increasing global focus on maritime security, underwater domain awareness, and naval modernization programs driven by evolving maritime threats and geopolitical tensions, supporting demand.
  • NATO Defense Partnerships: Norbit serves NATO allies and international naval forces with critical underwater surveillance systems, providing stable revenue and opportunities for defense partnerships that support program continuity and collaboration.
  • Maritime Technology Moat: The company`s expertise in underwater acoustics, sensor fusion, and maritime surveillance creates significant barriers to entry and competitive advantages in niche defense applications, reinforcing adoption.

  🐌 Key considerations before investing in Norbit

  Before investing in Norbit, consider headwinds that could affect performance, execution, and returns in defense markets carefully:

  • Defense Spending Vulnerability: Heavy reliance on naval defense spending makes the company vulnerable to military budget cuts, changing procurement priorities, and delays in maritime modernization programs worldwide, and timing risks.
  • Market Size Limitations: Specialization in underwater surveillance creates market size constraints and limits growth opportunities compared to broader defense technology companies and diversified peers, scaled platforms in global programs.
  • Technology Development Risks: Rapid advancement in underwater detection technologies and autonomous systems could disrupt traditional sonar markets, requiring continuous R&D investment with uncertain returns and market positioning today.
  • Scale Resource Constraints: Limited resources compared to large defense contractors may constrain ability to compete for major programs and invest in next-generation technologies at required scale levels for global market expansion.

  Final thoughts on Norbit

  Norbit`s leadership in underwater surveillance, positioning in maritime security, and specialized defense capabilities offer targeted exposure to niche naval technology growth. Dependence on defense budgets, market size constraints, development risk, and scale limitations require measured expectations and careful evaluation of program execution. Match investment decisions to risk appetite and horizon, and monitor contracts, modernization programs, and funding to navigate evolving maritime defense dynamics.

• Kongsberg (OL:KOG)

  Kongsberg Gruppen is a Norwegian defense technology company headquartered in Kongsberg, Norway, specializing in missile systems, remote weapon stations, and military electronics. Founded in 1814, the company evolved from traditional defense manufacturing into a global provider of advanced weapon systems and integrated technologies for modern military needs. It holds leading positions in European defense markets, supplying NATO allies with precision systems and mission-critical electronic solutions across regions.

  Core businesses include Naval Strike Missile (NSM) and Joint Strike Missile (JSM), remote weapon stations, air defense systems, and specialized defense electronics for multiple platforms. These products support anti-ship warfare, air defense networks, and vehicle protection, enabling interoperable capabilities across NATO and allied forces today. With rising defense spending, Kongsberg is positioned to benefit from European modernization and demand for sophisticated weapon systems across allied markets.

  Kongsberg financial statements

  Analysts recommendation: N/A

  Financial Health

  • Return on assets (ROA): 6.85%
  • Return on equity (ROE): 36.74%
  • Return on investment (ROI): N/A

  Profitability

  • Gross margin: 59%
  • Operating margin: 15.2%
  • Net profit margin: 12.93%

  Growth

  • EPS (past 5 years): N/A
  • EPS (current): 8.02
  • EPS estimate (next quarter): N/A
  • EPS growth (this year): 25.3%
  • EPS growth (next year): N/A
  • EPS growth (next 5 years): N/A
  • EPS growth (quarter-over-quarter): N/A
  • Sales growth (past 5 years): N/A
  • Sales growth (quarter-over-quarter): 11.6%

  💡 Why invest in Kongsberg?

  Kongsberg demonstrates strengths in Norwegian defense and strong NATO integration, supporting modernization across allied markets:

  • NATO Defense Integration: Kongsberg`s missile systems and remote weapon stations are deeply integrated into NATO defense infrastructure, creating long-term revenue through procurement programs, strategic partnerships, and lifecycle support.
  • Norwegian Defense Leadership: The company holds dominant market positions in anti-ship missiles, vehicle protection systems, and defense electronics across European markets, providing substantial competitive advantages across allied programs.
  • Defense Spending Tailwinds: Kongsberg benefits from NATO`s commitment to increase defense spending to 2% of GDP and widespread military modernization programs across European allied nations driven by tensions and renewed priorities.
  • Cutting-Edge Defense Tech: The company`s expertise in precision strike capabilities, autonomous systems, and integrated defense solutions creates significant technological advantages and premium pricing power for premium defense contracts.

  🐌 Key considerations before investing in Kongsberg

  Kongsberg faces budget volatility, export controls, and intense competition, requiring disciplined execution and planning:

  • Defense Budget Volatility: Heavy reliance on European defense spending makes the company vulnerable to budget cuts, political changes, and shifts in military priorities that could impact contract values and growth and multi-year frameworks.
  • Export Control Restrictions: As a defense contractor, Kongsberg faces strict export controls, arms transfer regulations, and potential sanctions that can limit international sales opportunities and create compliance challenges and oversight.
  • Project Management Challenges: Complex development programs and defense contracts face potential delays, cost overruns, and technical challenges that could impact profitability and ministry relationships and compliance demands.
  • Global Defense Competition: Kongsberg faces intense competition from established defense contractors like Raytheon, MBDA, and Lockheed Martin, which have superior resources, global reach, and established relationships across contested markets.

  Final thoughts on Kongsberg

  Kongsberg`s leadership in European defense systems and NATO integration offers attractive exposure to modernization spending across allied markets and programs. However, budget volatility, export controls, complex programs, and competition require careful evaluation of defense market dynamics by disciplined investors today. Like a precise commander, Kongsberg combines technology and partnerships to deliver mission-critical systems for allied forces while navigating complex geopolitical environments.

• Kraken Robotics (V:PNG)

  Kraken Robotics is a Canadian marine technology company developing underwater robotic systems, sensors, and software for defense, commercial, and scientific applications. Founded in 2008, the company has built expertise in autonomous underwater vehicles and sensing systems for ocean exploration and maritime security. Kraken aims to deliver reliable subsea intelligence, surveillance, and reconnaissance capabilities through proprietary technologies and integrated platform solutions for critical operations worldwide.

  Core operations include AUVs, synthetic aperture sonar, batteries, and software enabling seabed mapping, mine detection, and environmental monitoring for government and industry use. Customers span defense organizations, offshore energy firms, research institutions, and marine operators served through direct sales and strategic partnerships globally. Rising focus on ocean security, offshore energy activity, and marine research positions Kraken to benefit from growing demand for advanced underwater technologies.

  Kraken Robotics financial statements

  Analysts recommendation: 2.1

  Financial Health

  • Return on assets (ROA): 3.87%
  • Return on equity (ROE): 11.18%
  • Return on investment (ROI): 6.7%

  Profitability

  • Gross margin: 55.87%
  • Operating margin: 15.75%
  • Net profit margin: 16.17%

  Growth

  • EPS (past 5 years): 67.4%
  • EPS (current): 0.07
  • EPS estimate (next quarter): 0.15
  • EPS growth (this year): 41.1%
  • EPS growth (next year): 28.6%
  • EPS growth (next 5 years): 35.2%
  • EPS growth (quarter-over-quarter): 48.9%
  • Sales growth (past 5 years): 52.7%
  • Sales growth (quarter-over-quarter): 60.1%

  💡 Why invest in Kraken Robotics?

  Kraken Robotics pairs subsea robotics and synthetic aperture sonar with defense partnerships to drive growth in subsea intelligence:

  • Advanced Technology Portfolio: Kraken Robotics possesses proprietary underwater robotics and sensing technologies including synthetic aperture sonar and autonomous underwater vehicles that provide competitive advantages for mission-critical use.
  • Defense Market Exposure: The company serves military and defense customers with critical underwater surveillance and mine detection capabilities, providing access to stable government contracts and specialized markets, enabling resilient operations.
  • Growing Market Opportunities: Kraken Robotics benefits from expanding demand for ocean exploration, offshore energy support, and marine security applications driven by increasing focus on underwater intelligence across demanding environments.
  • Strategic Partnership Approach: The company leverages partnerships with larger defense contractors and marine technology companies to access broader markets, share development costs, and accelerate commercialization with strong reliability.

  🐌 Key considerations before investing in Kraken Robotics

  Kraken Robotics faces small scale, development risk, customer focus, and market cyclicality, affecting execution and returns:

  • Small Company Risks: As a relatively small technology company, Kraken Robotics faces challenges in competing with larger defense contractors and technology companies that have greater resources and established relationships, and scalability.
  • Technology Development Risk: The company operates in highly technical markets where product development requires significant R&D investment with uncertain outcomes, creating risks of technological obsolescence or development delays.
  • Customer Concentration Dependency: Revenue depends on relationships with key defense and commercial customers, creating vulnerability to contract losses, budget cuts, or changes in customer procurement strategies and priorities, procurement timing.
  • Market Volatility Exposure: The marine technology market can be cyclical and dependent on government defense spending, offshore energy activity, and research funding that can fluctuate based on economic and political conditions, over cycles.

  Final thoughts on Kraken Robotics

  Kraken Robotics` proprietary technology, defense exposure, expanding opportunities, and partnership strategy provide a compelling platform for subsea intelligence and marine robotics growth. Yet small scale, technical development risk, customer concentration, and market cyclicality warrant measured expectations and careful evaluation of program execution. Align investment decisions with risk appetite and horizon, and monitor contracts, deliveries, backlog, and funding to navigate the evolving underwater technology landscape.

• Leonardo DRS (MI:LDO)

  Leonardo DRS is a premier US-based defense contractor specializing in advanced military technology solutions, sensor systems, and electronic warfare capabilities for the US Department of Defense and allied nations worldwide. Founded in 1969 and headquartered in Arlington, Virginia, the company operates as a subsidiary of Italian aerospace and defense giant Leonardo S.p.A., combining global expertise with specialized US defense market knowledge. This strategic positioning enables Leonardo DRS to leverage global defense technology leadership while maintaining focused access to critical US defense programs and allied security partnerships worldwide.

  The company`s core business revolves around mission-critical defense technologies including advanced sensor systems, electronic warfare solutions, intelligence and surveillance systems, and power and propulsion technologies for military platforms. Leonardo DRS specializes in infrared imaging systems, naval combat systems, ground vehicle electronics, and next-generation military communication technologies that enhance battlefield awareness and operational effectiveness. With rising global defense expenditure and increasing demand for sophisticated military technologies, Leonardo DRS is strategically positioned to capitalize on US defense modernization programs and the growing need for advanced sensor and electronic warfare capabilities in response to evolving threats from near-peer adversaries and asymmetric warfare challenges.

  Leonardo DRS financial statements

  Analysts recommendation: 1.78

  Financial Health

  • Return on assets (ROA): 4.43%
  • Return on equity (ROE): 11.76%
  • Return on investment (ROI): 7.88%

  Profitability

  • Gross margin: 37.92%
  • Operating margin: 7.12%
  • Net profit margin: 5.54%

  Growth

  • EPS (past 5 years): 9%
  • EPS (current): 2
  • EPS estimate (next quarter): 0.22
  • EPS growth (this year): 56.7%
  • EPS growth (next year): 16.05%
  • EPS growth (next 5 years): 13.87%
  • EPS growth (quarter-over-quarter): 70.64%
  • Sales growth (past 5 years): 3.78%
  • Sales growth (quarter-over-quarter): 10.6%

  💡 Why invest in Leonardo DRS?

  Leonardo DRS demonstrates compelling strengths in advanced defense sensor technology solutions for global operations:

  • Defense Technology Leadership: Leonardo DRS holds dominant market positions in sensor systems, electronic warfare, and naval combat technologies, creating substantial competitive advantages and high barriers to entry for competitors.
  • Operational Execution Risks: Leonardo DRS faces intense competition from established defense contractors like Raytheon, Lockheed Martin, and Northrop Grumman, which have superior resources and broader defense portfolios.
  • Advanced Military Innovation: Leonardo DRS invests heavily in cutting-edge technologies including hypersonic systems, electro-optical sensors, and next-generation electronic warfare capabilities that maintain technological leadership.
  • Defense Spending Beneficiary: The company benefits from increased U.S. defense budgets, military modernization programs, and growing demand for advanced sensor technologies driven by near-peer competition and evolving threats.

  🐌 Key considerations before investing in Leonardo DRS

  Leonardo DRS faces significant US budget dependency, intense competition, and significant geopolitical supply risks:

  • U.S. Budget Dependency: Heavy reliance on U.S. defense spending makes the company vulnerable to budget cuts, political changes, and shifts in military priorities that could impact contract values and revenue stability.
  • Defense Contractor Competition: Leonardo DRS faces intense competition from established defense contractors like Raytheon, Lockheed Martin, and Northrop Grumman, which have superior resources and broader defense portfolios.
  • Technology Disruption Risk: Rapid advancement in defense technologies and emerging competitors could challenge the company`s market position in sensor systems and electronic warfare capabilities across multiple defense domains.
  • Geopolitical Supply Risks: As a subsidiary of Italian Leonardo S.p.A., the company faces potential supply chain disruptions, export restrictions, and geopolitical tensions that could impact operations and growth.

  Final thoughts on Leonardo DRS

  Leonardo DRS`s leadership in defense sensor technologies, strategic integration with U.S. military programs, advanced innovation capabilities, and defense spending tailwinds create compelling opportunities for investors seeking exposure to the U.S. defense technology sector. However, the company`s exposure to defense budget volatility, competitive pressures, technology disruption risks, and geopolitical supply chain challenges require careful evaluation of the complex dynamics in defense markets. Like a sophisticated targeting system that combines precision sensors with strategic intelligence, Leonardo DRS leverages technological excellence with defense market positioning to navigate competitive challenges while delivering mission-critical capabilities for U.S. military forces and allied defense customers worldwide.

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If you are interested specifically in European defense stocks, check out my best European defense stocks.