Russia Ukraine drone warfare is increasingly reshaping how governments think about defense, supply chains and budgets. Fire Point’s rapid scale up of drones and missiles, along with Europe’s slower funding response, sit at the heart of that story, and investors are watching closely. This article walks through three large aerospace and defense stocks exposed to these shifts and explains how this backdrop could either support or challenge their long term appeal.

The three stocks below are just a starting sample, and the full screen surfaced 46 more aerospace and defense companies with equally compelling narratives that are not covered in this article. To go deeper into this theme, head straight into the Aerospace & Defense Sector screener to identify, compare, and analyze the highest conviction plays across the sector.

Cadre Holdings (CDRE)

Cadre Holdings is a specialist in safety and survivability gear, supplying body armor, bomb suits, duty gear and nuclear related safety equipment to law enforcement, military, nuclear and energy customers worldwide. It sells through a mix of direct sales, distributors, online channels and third party resellers, giving it broad reach into government agencies and first responders. The company has a market cap of about US$1.5b, putting it firmly in the mid cap bracket.

Investors looking at Cadre Holdings are getting exposure to a pure play on personal protection and nuclear safety at a time when spending on defense technology and frontline equipment is under the spotlight again. The company sits on a record order backlog, is using acquisitions to expand into higher margin niches like nuclear safety and has raised its 2026 sales guidance. Earnings are currently weighed down by one off costs, margin pressure and a meaningful debt load. Adding in recent insider selling and a P/E that sits around the industry average, this is a stock where the long term upside case is clear, but the near term trade off between growth, balance sheet risk and headline valuation needs much closer inspection.

Cadre Holdings is scaling into nuclear safety and frontline protection, yet its debt load and current P/E keep many investors cautious. Get the full story with the 2 key rewards and 3 important warning signs

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TAT Technologies (TATT)

TAT Technologies provides thermal management systems and maintenance, repair and overhaul services for aircraft and jet engine components across commercial and military customers worldwide. The company supports everything from heat exchangers and environmental control systems to landing gear and auxiliary power units through both manufacturing and MRO contracts. TAT Technologies has a market cap of about US$515 million.

TAT Technologies sits at the crossroads of rising aircraft maintenance needs and growing defense spending, supplying thermal systems and MRO services that airlines and military customers cannot easily defer. A record backlog around US$580 million, new long term distribution and MRO agreements with Honeywell, and solid recent results with Q2 2026 net income of US$8.07 million indicate a high level of revenue visibility. At the same time, the company leans on external borrowing and is exposed to swings in discretionary MRO demand and foreign exchange, so investors need to weigh balance sheet risk and earnings volatility against the growth story tied to cargo MRO wins and expanding North American exposure.

TAT Technologies is building a sizeable backlog and fresh Honeywell deals are adding fuel. Yet the real story sits in how future expectations stack up against that US$515m market cap. See what the analyst forecasts for TAT Technologies is really pricing in.

Babcock International Group (LSE:BAB)

Babcock International Group is a long established defense engineering company that designs, builds and supports specialist marine, nuclear, land and aviation systems for government and military customers worldwide. Revenue is spread across Nuclear at about £2.1b, Marine at about £1.6b, Land at about £1.1b and Aviation at about £400 million, giving investors exposure to several core parts of defense spending rather than a single product line. The company has a market cap of about £5.8b, placing it firmly in large cap territory.

For investors watching how Ukraine’s drone heavy conflict is reshaping defense priorities, Babcock International Group sits in an interesting spot. It combines a broad engineering role across marine, nuclear and land systems with a growing position in autonomous and uncrewed platforms, acting as the partner that turns fast moving defense tech into deployable capability. Forecast earnings growth and improving margins, plus a £200 million buyback and high contract coverage into 2027, point to a business with solid visibility, although recent pressure on net margins and heavy use of external funding mean the quality of future cash flow still needs careful scrutiny.

Babcock International Group looks like it is turning contract visibility and engineering reach into a rebuilding story, yet the real test sits in future earnings quality. See how the analyst forecasts for Babcock International Group could change the narrative on cash flow strength and valuation risks that are easy to overlook at first glance.

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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.