Geopolitical shocks like the current escalation between Iran and the US can quickly reshape risk and opportunity across Defense & Aerospace stocks, especially as sanctions, oil supply concerns and surging inflation in Iran feed into broader market uncertainty. For investors watching how conflict, currency stress and trade disruption may influence defense spending and related supply chains, this article walks through three stocks from our Defense & Aerospace Sector screener that appear more exposed to these headlines in a potentially positive way. The focus is on what the news might mean for each stock so you can decide whether they deserve a closer look or a wider berth.

Spirax Group (LSE:SPX)

Overview: Spirax Group is a UK headquartered engineering company that helps industrial customers manage heat and fluids efficiently, supplying steam systems, electric heating solutions and specialised pumps used in everything from food processing and pharmaceuticals to power plants and semiconductor production.

Operations: Spirax Group generates most of its revenue from Steam Thermal Solutions at £853.4m, alongside £441.3m from Electric Thermal Solutions and £408.2m from Watson-Marlow Fluid Technology Solutions. The USA (£491.0m) and Rest of the World (£658.1m) are its largest geographic contributors.

Market Cap: £5.1b

Spirax Group sits at the intersection of decarbonization, energy efficiency and advanced manufacturing. This can be especially relevant as defense and aerospace customers look to secure more resilient, lower energy production lines in a more volatile world. Its focus on thermal energy optimization, digital connectivity and higher margin service revenues gives investors exposure to recurring income streams. The pivot toward maintenance and solutions sales in Asia is intended to help smooth out more cyclical project demand. At the same time, the stock carries meaningful risks, including a rich valuation, high debt, currency headwinds and ongoing restructuring costs, all of which can amplify any slowdown in key industrial markets. For investors weighing these trade offs, the key consideration is how those long term themes compare with the nearer term execution and balance sheet questions.

Spirax Group’s shift toward higher margin services and energy efficient solutions could be masking a much sharper risk reward profile than the headline story suggests, and the full picture sits inside the 2 key rewards and 1 important warning sign

Fluence Energy (FLNC)

Overview: Fluence Energy provides large scale battery storage systems and software that help utilities, grid operators and large power users balance renewable energy, stabilize electricity networks and support data center power needs. Its products combine hardware, control software and digital services so customers can store energy when it is cheap or abundant and release it when reliability or price pressures are highest.

Operations: Fluence Energy generates all of its revenue from Batteries / Battery Systems at approximately US$2.6b, with reported regional figures of US$463.3m from APAC and US$570.4m from EMEA alongside a US$1.6b segment adjustment.

Market Cap: US$2.6b

Fluence Energy sits at the crossroads of grid resilience, renewable integration and rising power needs from AI and defense related infrastructure. This positioning makes it an interesting stock to watch as geopolitical risk increases. The company pairs large battery systems with software, has a backlog above US$4.9b and has been reaffirming multi billion dollar revenue guidance. At the same time, it still reports losses and relies entirely on higher risk external funding, so execution on profitability targets is critical. Investors weighing the recent equity raise, governance concerns and volatile share price against a low P/S ratio and recognition as a Tier 1 storage supplier may find that the real story is how these tensions play out over the next few years, rather than in the latest headline.

Fluence Energy’s accelerating role in the grid and its multi billion dollar revenue guidance are only half the story; the real test sits inside the analyst forecasts for Fluence Energy and a funding twist most investors are missing

NRW Holdings (ASX:NWH)

Overview: NRW Holdings is an Australian contractor that builds and services mining and civil infrastructure, handling everything from roads, rail and water projects to mine development, operations and maintenance, as well as materials handling and industrial engineering for resource and energy clients.

Operations: NRW Holdings generates most of its revenue from Mining at A$1.5b, alongside A$1.1b from MET, A$850.0m from Civil, A$206.9m from Segment Adjustment and a A$44.8m reduction from Corporate / Eliminations.

Market Cap: A$3.1b

NRW Holdings is attracting attention because it couples a project pipeline across mining and civil work with expanding roles in defense related infrastructure at a time when governments are looking for reliable contractors. At the same time, the stock trades at a large discount to one estimate of fair value and carries a very high P/E driven by thin 1.4% margins. Earnings are forecast to grow more than 20% a year, and new defense focused contracts could deepen relationships in higher priority supply chains. However, exposure to weather disruptions, client solvency issues and sector concentration means that growth involves meaningful risk. The key question for investors is how those contract wins, margin rebuild and funding risks compare when viewed together.

NRW Holdings’ thin 1.4% margins, alongside a growing contract pipeline, hint at earnings power the market may be misreading, and the real twist sits inside the analyst forecasts for NRW Holdings

The three Defense & Aerospace stocks in this article are only a starting point. The full Defense & Aerospace Sector screener surfaces 27 more companies with equally compelling narratives that could change how you view the sector. Use Simply Wall St to identify, filter and analyze the specific catalysts, risk profiles and business narratives that matter to you so you can focus on the highest conviction ideas in this theme.

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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.