The fiscal 2027 National Defense Authorization Act (NDAA) calls for $1.15 trillion in U.S. military spending, topping the $1 trillion mark for the first time. The ongoing war in Ukraine; tensions between China and Taiwan; and conflicts involving Israel, the U.S., and Iran and its proxy terror groups in the Middle East may force governments to increase defense industry investment further, creating a tailwind for defense sector earnings.
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Defense stocks are attractive investments because they often have predictable, long-term government contracts. Here are seven of the best defense stocks to buy now, according to Morgan Stanley analysts:
| Stock | Implied upside* |
| GE Aerospace (ticker: GE) | 12% |
| RTX Corp. (RTX) | 18% |
| Howmet Aerospace Inc. (HWM) | 14% |
| General Dynamics Corp. (GD) | 24% |
| Northrop Grumman Corp. (NOC) | 45% |
| TransDigm Group Inc. (TDG) | 29% |
| L3Harris Technologies Inc. (LHX) | 33% |
*From June 23 closing prices.
GE Aerospace (GE)
GE Aerospace supplies jet engines and services around the world and currently has an installed base of roughly 30,000 military and 50,000 commercial aircraft engines. The company’s defense and propulsion technologies business designs, produces, and services jet engines and associated electrical systems and components for governments, commercial airframers and militaries. Analyst Kristine Liwag says GE investors have been focused on the commercial aerospace aftermarket, but the company’s defense business is positioned for multiyear growth, improving sales mix, margin expansion and structural productivity gains. Morgan Stanley has an “overweight” rating and $400 price target for GE stock, which closed at $356.47 on June 23.
RTX Corp. (RTX)
RTX is the defense behemoth created by the 2020 merger of Raytheon and United Technologies. The company’s Collins and Pratt & Whitney subsidiaries are more focused on the commercial aerospace industry, but its Raytheon subsidiary develops advanced sensors and provides training, software and cybersecurity solutions for the U.S. intelligence community and the Defense Department. Liwag says Raytheon is experiencing robust demand across its entire portfolio, and RTX’s potential for margin expansion and sustained growth makes it her top overall aerospace stock pick. Morgan Stanley has an “overweight” rating and $220 price target for RTX stock, which closed at $186.39 on June 23.
Howmet Aerospace Inc. (HWM)
Howmet Aerospace manufactures lightweight metal products, specializing in jet engine components, titanium structural parts, aerospace fastening systems and forged wheels. The company also provides defense solutions to its military partners, such as precision machining, integrated program management and metals expertise. Liwag anticipates an increase in demand from original equipment makers will support Howmet’s commercial aerospace growth. She says the company’s pricing power, enviable competitive positioning and consistent execution will help Howmet outgrow its industry peers. Liwag also anticipates additional margin expansion and capital deployment. Morgan Stanley has an “overweight” rating and $315 price target for HWM stock, which closed at $275.13 on June 23.
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General Dynamics Corp. (GD)
General Dynamics is a diversified aerospace and defense company that produces a wide range of products, including Gulfstream jets, Abrams tanks and nuclear submarines. The majority of the company’s revenue comes from the U.S. government, particularly its large contracts with the Defense Department. Liwag says General Dynamics will benefit from accelerating global defense spending and resilient jet demand. She says the Donald Trump administration’s focus on modernizing and supporting the U.S. shipbuilding industry could also be a positive catalyst for General Dynamics’ marine business. Morgan Stanley has an “overweight” rating and $435 price target for GD stock, which closed at $350.34 on June 23.
Northrop Grumman Corp. (NOC)
Northrop Grumman is one of the world’s largest weapons and military technology producers. The company’s defense systems segment provides battle management and missile systems products and services, while its mission systems segment focuses on airborne sensors and networks, as well as other military and intelligence mission solutions. Liwag says Northrop has substantial exposure to two of the three so-called nuclear triad military nuclear delivery vehicles. Northrop’s B-21 bomber and its Sentinel intercontinental ballistic missile represent large franchise programs that Liwag says could provide earnings power for decades. Morgan Stanley has an “overweight” rating and $745 price target for NOC stock, which closed at $513.22 on June 23.
TransDigm Group Inc. (TDG)
TransDigm designs and manufactures original aircraft parts sold to manufacturers. The company also produces aftermarket replacement parts sold to commercial and military aircraft operators. In recent years, TransDigm has announced several significant buyouts, including acquiring SEI Industries, Raptor Scientific, and the components and subsystems business of Communications & Power Industries. Liwag says investors are too concerned about TransDigm’s recent slowdown in organic revenue growth relative to peers. She says TransDigm is the most undervalued aerospace and defense industrial compounder, with significant upside potential from recent levels. Morgan Stanley has an “overweight” rating and $1,680 price target for TDG stock, which closed at $1,297.68 on June 23.
L3Harris Technologies Inc. (LHX)
L3Harris Technologies is an aerospace and defense company focused on technology-driven mission solutions. The company’s leading defense products include airborne intelligence, surveillance and reconnaissance, along with electronic warfare systems, precision-guided munitions and propulsion products, communication systems, integrated vision solutions, and space and missile defense technologies. Liwag says L3Harris’ recent order momentum is encouraging, including its 2.2x international and 1.4x overall book-to-bill ratios in the first quarter. She says the company’s full-year operating guidance is likely overly conservative, opening the door for upside surprises. Morgan Stanley has an “overweight” rating and $390 price target for LHX stock, which closed at $293.77 on June 23.
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7 Best Defense Stocks to Buy Now originally appeared on usnews.com
Update 06/24/26: This story was published at an earlier date and has been updated with new information.
