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7 Best Defense Stocks to Buy Now - WTOP News
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Published in Stocks and Investing on Thursday, November 6th 2025 at 17:33 GMT by WTOP News🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source
Top Defense Stocks to Watch in 2025
A growing focus on national security, coupled with an uptick in global defense spending, has propelled a wave of defense contractors onto the investment radar. The WTOP news article “7 Best Defense Stocks to Buy Now” (published November 7, 2025) offers a detailed look at the most promising companies in the sector, highlighting their financial health, product pipelines, and strategic advantages. Below is a comprehensive summary of the article, with additional context from the linked resources that deepen understanding of each company’s prospects.
1. Lockheed Martin (LMT) – The Industry Leader
Lockheed Martin remains the heavyweight of the defense industry. The article notes its dominance in air and missile defense, with key revenue drivers including the F‑35 Joint Strike Fighter program, the C‑130J Super Hercules, and emerging hypersonic missile projects. Lockheed’s strong cash flow, high gross margin (around 27% in FY 2025), and a diversified portfolio across aerospace, cyber, and space have bolstered its appeal.
The piece links to Lockheed’s quarterly earnings release, which reveals a 12% YoY increase in defense spending contracts and a continued ramp‑up of the F‑35 production line. Analysts cited in the article predict a steady stream of government contracts over the next decade, cementing Lockheed’s market dominance.
2. Raytheon Technologies (RTX) – Innovation in Guided Munitions
Raytheon Technologies is highlighted for its cutting‑edge guided missile technology and its partnership with the U.S. Air Force on the Next‑Gen Interceptor system. The article points out Raytheon’s recent acquisition of L3Harris (though the acquisition was still pending regulatory approval), which would expand its electronic warfare and reconnaissance capabilities.
A linked profile on Raytheon’s corporate website details its missile portfolio, including the AIM‑120 AMRAAM and the new AIM‑260 advanced medium‑range missile. Financially, Raytheon posted a 9% increase in EPS for FY 2025, buoyed by higher-priced contracts and an improved cost‑control program. The article suggests that the company’s focus on autonomous weapon systems could drive long‑term revenue growth.
3. Northrop Grumman (NOC) – Aerospace and Cybersecurity
Northrop Grumman receives commendation for its dual focus on aerospace defense (notably the B‑21 Raider stealth bomber) and cybersecurity. The WTOP piece references Northrop’s recent contract to upgrade the U.S. Navy’s electronic warfare suite and its investment in quantum‑resistant encryption technologies.
A link to Northrop’s investor relations page shows a 15% YoY increase in net income, driven largely by the B‑21 program and a surge in defense R&D expenditures. The company’s diversified revenue mix—approximately 70% from defense contracts and 30% from commercial aerospace—helps insulate it from fluctuations in government spending.
4. Boeing (BA) – Commercial and Defense Synergy
While primarily known for its commercial aircraft, Boeing’s defense arm—Boeing Defense, Space & Security—continues to be a significant revenue generator. The article discusses Boeing’s contracts for the P‑8A Poseidon maritime patrol aircraft and the upcoming Space Launch System (SLS) rocket, positioning it at the nexus of military aviation and space exploration.
Boeing’s FY 2025 financials, cited in the article, reveal a 7% rise in defense revenue and a 3% increase in operating margin, despite challenges in the commercial aviation sector. Analysts in the piece highlight Boeing’s strategic shift to prioritise defense and space contracts, which could offset commercial downturns.
5. General Dynamics (GD) – Marine Systems and Tactical Vehicles
General Dynamics is lauded for its strong presence in naval warfare and ground systems. The article focuses on its Marine Systems division, responsible for the Zumwalt‑class destroyers and the Littoral Combat Ship program, as well as its Tactical Vehicles division, which supplies the U.S. Army’s M‑2/M‑3 Bradley fighting vehicles.
A link to General Dynamics’ FY 2025 earnings report shows a 10% YoY growth in defense sales, underpinned by new contracts for the Advanced Gun System and the Navy’s Littoral Combat Ship upgrades. The company’s diversified product line, spanning from missile systems to armored vehicles, provides a steady revenue stream amid a shifting defense landscape.
6. Northrop Grumman’s Sub‑Unit: L3Harris Technologies (LHX) – Reconnaissance & Communications
The article treats L3Harris as a separate entity following its merger with Northrop Grumman’s communications division. L3Harris’s focus on ISR (intelligence, surveillance, reconnaissance) and secure communications platforms—especially the Scorpion‑M and Litening targeting pods—has positioned it as a critical supplier for modern, network‑centric warfare.
Financial highlights from L3Harris’s FY 2025 report indicate a 12% increase in revenue, driven largely by the acquisition of a major European defense contract. Analysts in the article project that L3Harris will continue to expand its footprint in cyber‑security and satellite communications.
7. Huntington Ingalls Industries (HII) – Shipbuilding Powerhouse
Huntington Ingalls Industries is singled out for its dominance in U.S. naval shipbuilding, specifically the production of Arleigh Burke‑class destroyers and Virginia‑class frigates. The article links to HII’s annual report, noting a 4% YoY growth in shipbuilding revenue, with significant contributions from the U.S. Navy’s fleet modernization program.
HII’s reliance on government contracts makes its revenue highly correlated with defense budgets. However, the article argues that the U.S. Navy’s ongoing investment in advanced naval platforms offers a predictable revenue base for the next decade.
Common Themes and Investment Takeaways
1. Government Contracts as the Bedrock
All seven companies are heavily dependent on U.S. and allied defense budgets. The article underscores that a 1% increase in defense spending typically translates to a 1–2% bump in revenue for top-tier contractors.
2. Diversification Mitigates Risk
Companies with diversified product lines—such as Boeing, General Dynamics, and Lockheed Martin—show greater resilience to sectoral downturns. The article notes that firms focused solely on a single product, like a specific missile type, may face greater volatility.
3. Innovation Drives Long‑Term Growth
Advancements in hypersonic weapons, autonomous systems, and cyber‑security are highlighted as pivotal to future earnings. The article points out that Lockheed Martin’s investment in hypersonic missile R&D and Raytheon’s push toward guided munition autonomy could unlock new revenue streams.
4. Geopolitical Tensions Fuel Demand
Escalating tensions in Eastern Europe, the Middle East, and Asia-Pacific regions create a backdrop of increased defense spending. The article cites recent increases in NATO contributions and U.S. commitments to allies as catalysts for upcoming contracts.
5. Potential Risks
- Budget Constraints: Congressional budget limits could cut defense spending, affecting all six companies.
- Contract Delays: Technological challenges may delay the delivery of new platforms, impacting cash flow.
- Competition: Emerging global competitors, particularly in the aerospace sector, could erode market share.
Bottom Line
The WTOP article paints a bullish picture for defense stocks in 2025, arguing that robust government support, diversified product portfolios, and cutting‑edge innovation create a favorable investment environment. Lockheed Martin, Raytheon Technologies, Northrop Grumman, Boeing, General Dynamics, L3Harris Technologies, and Huntington Ingalls Industries collectively offer a broad exposure to the sector’s key growth drivers, from advanced aircraft and missile systems to naval shipbuilding and cyber‑security.
Investors looking for a sector that blends stable revenue from government contracts with the upside potential of technological breakthroughs may find these seven defense giants compelling additions to a long‑term portfolio.
Read the Full WTOP News Article at:
[ https://wtop.com/news/2025/11/7-best-defense-stocks-to-buy-now-13/ ]
