Published April 07, 2023
Russia's invasion of Ukraine has been a boon for U.S. defense companies that produce missiles, aircraft carriers, bomber jets, surveillance technology, and military satellites.1
Some estimates suggest European defense spending could increase by about two-thirds between 2021 and 2026, reaching €488 billion (about $531.4 billion).
2
Shares of some U.S. defense companies, including Lockheed Martin Corp., (LMT) Northrop Grumman Corp., (NOC), and Raytheon Technologies Corp. (RTX), have benefited from increased spending, outperforming the broader market over the past year.
The Invesco Aerospace & Defense ETF (PPA) holds a broad range of stocks, including some from companies that are not pure-play defense companies, such as those involved in civilian aerospace manufacturing. However, it is the closest proxy available for the broader defense industry. PPA has risen about 3% over the last 12 months, while the Russell 1000 Index has shed almost a tenth of its value.3
Here are the top three defense stocks with the best value, the fastest growth, and the most momentum. The benchmark figures above are as of April 5, and all data below are as of April 4.
These are the defense stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.
| Fastest-Growing Defense Stocks |
| | Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) |
| CAE Inc. (CAE) | 23.02 | 7.3 | 190.0 | 11.6 |
| Bombardier Inc. (BBD.B.TO) | CA$71.59 | CA$6.8 | 18.9 | 60.9 |
| Hexcel Corp. (HXL) | 69.36 | 5.8 | 95.5 | 19.2 |