Russia’s public rift over its war economy, from the firing of VEB’s chief economist to signs of industrial strain, is a reminder that geopolitical risk does not stay neatly within borders. For investors, shocks like this can reshape how capital flows toward defence and aerospace stocks linked to NATO countries. This article unpacks that story and outlines three stocks exposed to this news that analysts are watching closely.

The three defence and aerospace stocks covered next are only a starting point, and the full screen surfaced 58 more companies in NATO-aligned markets with equally compelling narratives that are not covered in this article. To identify and analyze the highest conviction ideas in this space, head straight to the Defence and Aerospace Stocks in NATO-Aligned Countries screener.

Cohort (AIM:CHRT)

Overview: Cohort is a UK headquartered defence technology group that supplies communications, sonar, surveillance and combat systems to armed forces across NATO aligned and allied markets, spanning land, maritime, air, space and cyber domains. Its businesses focus on mission critical kit such as warship and submarine command systems, tactical radios, underwater sensors and electronic surveillance, which puts it firmly in the defence and aerospace theme rather than civilian markets.

Operations: Cohort generates revenue across two main segments, with Communications and Intelligence contributing about £159 million and Sensors and Effectors about £147 million. This is supported by a geographically diverse mix led by the UK at £133.5 million and further contributions from other European countries, Asia Pacific and Africa, Australia, North and South America, Portugal and Germany.

Market Cap: £634 million

Cohort gives you exposure to higher tech areas of NATO aligned defence such as underwater sensors, electronic surveillance and secure communications. In these areas, contracts often run for years and can build meaningful order books. Analysts highlight solid recent earnings growth, high quality earnings and a progressive dividend, which together indicate a business that has been turning defence demand into cash rather than just headlines. At the same time, Cohort relies entirely on external funding, carries a P/E above some peers and operates in a sector where government budgets and long projects can shift, so execution and capital discipline matter. For investors who want to go deeper into defence technology beyond the largest primes, this is a stock that may merit further research.

Progressive earnings, cash generation and a higher P/E hint that the full Cohort story may not be obvious at first glance. The 4 key rewards and 1 important warning sign could show what is really driving that rating and where it might crack next.

Build your own defence tech shortlist like Cohort

Cohort and the other defence stocks in this article all came from a single screener, but the real edge comes when you shape the filters to match your own thesis. Use our flexible Screener to mix valuation, growth, balance sheet and risk metrics, or tap into our curated Investing Ideas for ready made shortlists.

York Space Systems (YSS)

Overview: York Space Systems is a US based space and defense contractor that designs, builds, and operates satellites and full mission services for national security, government, and commercial customers, giving you direct exposure to US space programs within the NATO aligned defence theme.

Operations: York Space Systems generates all of its approximately US$405 million in revenue from Space Infrastructure activities in the United States.

Market Cap: US$1.5b

York Space Systems gives you pure play exposure to proliferated low earth orbit constellations for US defence and national security, at a time when Russia’s war economy strains are keeping attention on resilient NATO space infrastructure. The company has a sizeable contracted backlog and recent SDA deployment milestones. However, guidance cuts, contract timing issues under new IDIQ frameworks, and larger than expected losses have pushed the stock to record lows and cooled analyst sentiment. That mix of contract momentum, revenue growth expectations and clear funding and profitability risks is exactly why York Space Systems is attracting interest from investors who think the gap between its defence role and current market pricing might be too wide.

York Space Systems appears to be a stock where contract momentum and recent setbacks may not fully align with today’s pricing. Get the full story in the 3 key rewards and 1 important major warning sign

RADA Electronic Industries (RADA)

Overview: RADA Electronic Industries is a pure-play defence electronics company that builds radar and avionics systems for air forces and unmanned aircraft, as well as land based tactical radars for air defence, border surveillance and counter drone missions. That tight focus on military radar and electronics links RADA directly to the screener’s theme of NATO aligned defence spending on advanced sensing and mission systems.

Market Cap: US$491 million

RADA Electronic Industries is worth a closer look if you want concentrated exposure to defence electronics that sit on the sharp end of rising radar and drone related demand. Forecasts point to very strong earnings growth of about 83.7% a year on top of roughly 16.1% annual revenue growth, and the stock trades around 36.7% below one fair value estimate. Together, these factors suggest an interesting setup. The catch is that margins have compressed from 19.5% to 5.3%, return on equity is just 3.8% and all liabilities are higher risk external borrowings, so execution on new programs and balance sheet discipline really matter. With a rich P/E multiple that already prices in a lot of growth, RADA is a stock where contract wins, margin repair and debt management could be the deciding factors for long term investors.

RADA Electronic Industries has earnings forecasts that look powerful, yet compressed margins and low return on equity keep questions alive. Get the context behind that growth story in the analyst forecasts for RADA Electronic Industries

Seeking Fresh Alternatives Before They Fly

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.