Three Military Stocks Gaining Momentum Through Expanding Defense Contracts

The defense and aerospace sector is experiencing substantial growth, with the global military and defense market projected to surpass $1 trillion by 2027, fueled by rising government expenditures and investments in cutting-edge technologies. This expansion creates compelling opportunities for investors seeking exposure to military stocks that are capturing these new opportunities. The following analysis examines three companies that stand to benefit from expanded military budgets, lucrative contracts, and accelerating demand for advanced defense systems and equipment.

General Dynamics: Landing Major Military Contracts While Expanding Backlog

General Dynamics Corporation (NYSE: GD) operates as a comprehensive aerospace and defense contractor, organized across four primary business divisions. Its Aerospace segment manufactures business jets and provides aircraft maintenance services; Marine Systems constructs naval vessels and submarines for the U.S. Navy and commercial clients; Combat Systems develops land-based military vehicles, weapons systems, and ammunition; and its Technologies division supplies information technology infrastructure, communications platforms, cloud solutions, artificial intelligence systems, and advanced services to military, intelligence, and federal civilian agencies.

The company recently secured significant recognition when the Government of Canada awarded General Dynamics Mission Systems-Canada four contracts valued at approximately $1.68 billion Canadian dollars (roughly $1.3 billion USD) to support the Canadian Army’s Land Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance systems. These contracts encompass extensive sustainment and modernization efforts spanning multiple years.

Financial performance remains robust. In its most recent quarter, General Dynamics reported record revenue of $11.7 billion, representing a 7.5% year-over-year increase. Net income reached $1.005 billion compared to $992 million previously, while earnings per share climbed to $3.64 from $3.58, marking the highest quarterly EPS in company history. Most notably, the company concluded the period with a record-high order backlog valued at $93.6 billion—a substantial pipeline reflecting strong future revenue visibility. Market analysts have assigned the stock a “Strong Buy” rating with price targets reaching $345.

TransDigm’s Aerospace Supply Chain Powers Through Double-Digit Growth

TransDigm Group Inc. (NYSE: TDG) specializes in manufacturing critical aircraft components through three distinct operational segments. The Power & Control division produces mechanical and electro-mechanical actuators, electrical systems, pumps, valve assemblies, power management devices, motors, generators, battery packs, data transmission controls, and cargo systems. Its Airframe segment offers engineered fastening solutions, connectors, sealing systems, cockpit components, interior furnishings, restraint systems, lighting assemblies, and parachute systems. The Non-Aviation division extends into ground transportation seat belts, space application actuators, energy sector turbine controls, and equipment refueling systems.

The company expanded its capabilities through the acquisition of the Electron Device business from Communications & Power Industries, TJC L.P., which supplies high-power microwave components serving aerospace, defense, and medical sectors. This strategic addition strengthens TransDigm’s positioning within military stock opportunities.

Recent financial results underscore strong operational momentum. In its latest reported quarter, revenue surged 28% year-over-year, driven by double-digit expansion across all operating segments and markets. Gross profit reached $1.04 billion, substantially exceeding the prior-year quarter’s $793 million. Adjusted earnings per share jumped 56%, climbing from $4.58 to $7.16. Management provided updated 2024 revenue guidance of $7.575 billion to $7.775 billion, signifying an 18% increase at the high end compared to the prior year—an upward revision from the initial $7.48 billion to $7.68 billion range. Analysts maintain a “Strong Buy” designation with a $1,380 price target, reflecting confidence in the company’s growth trajectory and profitability expansion.

AeroVironment Advances Military Drone Technology and Firepower Solutions

AeroVironment Inc. (NASDAQ: AVAV) designs and manufactures advanced robotic platforms including unmanned aerial systems and ground-based autonomous vehicles. The company supplies defense equipment, tactical weapons systems, and comprehensive services to the U.S. Department of Defense, federal agencies, and allied governments worldwide. Four core business segments drive performance: Small Unmanned Aircraft Systems, Tactical Missile Systems, Medium Unmanned Aircraft Systems, and High Altitude Pseudo-Satellite Systems.

The company recently conducted successful live-fire demonstrations of GPS-guided Shryke munitions deployed from VAPOR 55 MX drone platforms in collaboration with Corvid and L3Harris partners. The modular 40mm warheads achieved target accuracy within 1-2 meters across multiple engagements during a single flight sequence, demonstrating precision strike capability with minimal collateral effects—a critical requirement for modern military applications.

Financial results reflect this technological momentum. In the most recent quarter, revenue increased 62% year-over-year to $180.8 million. Net income surged 366% to $17.8 million, while non-GAAP earnings per share jumped to $0.97 compared to $0.01 in the prior-year period. Gross margin expanded 191% to $75.4 million. AeroVironment raised its fiscal-year revenue guidance to between $685 million and $705 million, reflecting accelerating demand for unmanned military systems. The stock carries a “Strong Buy” rating from analysts with a $155 price target, positioning it among the more attractive military stock opportunities currently available in the market.

The Military Stock Investment Case

These three companies illustrate how military stocks are capitalizing on increased government defense spending and technological modernization across the sector. General Dynamics demonstrates the strength of diversified defense contractors with expanding contract pipelines; TransDigm shows how specialized aerospace suppliers benefit from broad military platform expansion; and AeroVironment exemplifies the growth potential in emerging military technologies like autonomous systems. Collectively, they offer exposure to the defense and aerospace industries during a period of significant expansion and modernization initiatives globally.