Trump’s decision to scale back US–South Korea military exercises has not only unsettled the security order in Asia, it has also refocused attention on companies that sit closest to shifting defense priorities. When geopolitical risk and alliance doubts rise, investors often reassess which stocks might benefit or lose out. This article breaks down how that story could play out in 3 specific stocks from our Global Defense Contractors screener.

The 3 stocks below are just a starting sample, and the full Global Defense Contractors screen surfaced 23 more large, established companies with equally compelling risk, balance sheet and business profile stories that are not covered here. To identify and analyze the rest of this opportunity set straight away, head into the Global Defense Contractors screener.

AeroVironment (AVAV)

AeroVironment is a US defense technology company that builds uncrewed aircraft systems, loitering munitions, counter drone tools and space, cyber and directed energy hardware for militaries and government agencies worldwide. Most of its revenue comes from the Autonomous Systems segment at about US$1.4b, with the Space, Cyber and Directed Energy segment contributing roughly US$619 million. The stock has a market value of about US$9.7b.

Investors looking for focused exposure to defense modernization may find AeroVironment worth a closer look. The company is closely linked to unmanned systems and counter drone demand, with recent contracts for its P550 UAS, Locust laser system and Titan counter UAS platform. Management has also highlighted interest in long range attack drones and directed energy tools. At the same time, AeroVironment is working through losses, margin pressure from acquisitions and heavy reliance on US government budgets, so the balance between potential growth and execution risk is central to the story.

AeroVironment’s focus on unmanned systems and directed energy is pulling attention, but the real story could sit in how growth expectations compare with execution risk. Get the full picture in the analyst forecasts for AeroVironment

Build your own unmanned systems shortlist

AeroVironment and the other two stocks in this article all came out of a single screener run, but the real opportunity is in shaping your own filters. Use our customizable Screener to mix metrics like valuation, future growth, balance sheet strength and risks, or tap into our curated Investing Ideas if you prefer ready made shortlists.

HawkEye 360 (HAWK)

HawkEye 360 is a US space-enabled defense technology company that operates its own constellation of satellites to collect and process radio frequency signals, turning this data into intelligence for defense, intelligence and national security agencies in the US and allied countries. Its platform supports missions such as monitoring maritime activity, tracking military radar and air defense systems, and helping secure borders and civil space infrastructure. The stock has a market value of about US$2.2b.

HawkEye 360 provides direct exposure to the increasing use of commercial space data in defense, with contracts across the US government and international partners that focus on Indo Pacific surveillance needs at a time when alliance reliability is under fresh scrutiny. Revenue has been expanding quickly and analysts expect both sales and earnings to keep rising. However, the company is still reporting losses and relies on external borrowing for its funding, which raises execution and refinancing risk. Recent satellite launches, multi year contracts in regions such as the Indian Ocean and an experienced, independent board may support the investment case. At the same time, the high P/S ratio and share price volatility suggest that this is a situation that calls for careful research rather than reflexive trading.

HawkEye 360’s rapid contract wins and expanding satellite network suggest there is more to the story than the headline P/S ratio indicates. Get the full risk and opportunity picture in the 4 key rewards and 1 important warning sign

Hyundai Rotem (KOSE:A064350)

Hyundai Rotem is a South Korean industrial group that builds railway vehicles, defense systems and heavy plant and machinery for customers at home and abroad. Revenue is led by its AD&RH division at about ₩3.5t, followed by the Railway Sector at roughly ₩2.3t and the Eco Plant segment at around ₩0.5t. The stock carries a market value of about ₩16.0t.

Hyundai Rotem sits at the junction of South Korea’s rail build out and rearmament, with tanks, armored vehicles and export friendly rail platforms that plug directly into Indo Pacific defense concerns after the cutback in US joint drills. Strong profitability metrics, including net margins near 13% and ROE around 24%, support the current business performance. Analysts have published target prices that suggest upside potential from recent levels. The catch is relatively high reliance on external borrowing and a newer leadership team, which leaves less room for execution missteps just as defense demand and infrastructure projects are in focus.

Hyundai Rotem’s mix of double digit margins and strong ROE hints at a story that is not fully priced in yet. See how those numbers compare in the Hyundai Rotem financial health report.

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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.