Oil price volatility linked to the Strait of Hormuz has pushed energy security back to center stage. Aerospace and defense companies sit at the heart of this conversation, supplying hardware, software and services that governments tend to prioritize when key trade routes look vulnerable. For investors, this provides a focused way to seek exposure to that spending. This article highlights three stocks from the Aerospace And Defense screener that reflect this theme.

The three stocks below are only a starting sample from this theme, while the full screen surfaces 302 more Aerospace and Defense companies with equally compelling narratives that are not covered here. To identify and analyze the setups that best match your approach, head straight into the Aerospace And Defense screener.

ATI (ATI)

Overview: ATI Inc. is a Dallas based specialty materials company that supplies high performance titanium, nickel and cobalt alloys, as well as complex forged and machined components, to aerospace and defense, medical, energy and industrial customers worldwide.

Market Cap: $31.0b

ATI sits at the intersection of rising demand for advanced alloys in jets, defense programs and energy infrastructure, with a record $4.4b backlog and strong recent earnings giving investors clearer multi year visibility than many peers. The company is pushing margins higher as its High Performance Materials & Components and Advanced Alloys & Solutions segments focus on higher value contracts for commercial engines, naval nuclear work and missile defense, although this comes with a high P/E and a balance sheet that leans heavily on debt. For investors who can accept that financial risk, ATI offers a mix of growth, pricing power and governance quality that may warrant a closer look beyond the headlines.

ATI’s record backlog and margin focus suggest a story that many investors may not be fully pricing in, especially given the high P/E and leveraged balance sheet, which may be masking key details in the 2 key rewards and 1 important warning sign

Build your own aerospace and defense shortlist

ATI and the two other stocks in this article all came from a single Simply Wall St screener, but the real value comes when you create filters that match how you invest. Use our flexible Screener to mix metrics like valuation, growth, balance sheet strength and risks, or tap into our curated Investing Ideas for ready made stock shortlists.

Axon Enterprise (AXON)

Overview: Axon Enterprise builds a connected public safety ecosystem that combines TASER conducted energy devices, body and in-car cameras, drones and counter-drone tools with cloud software that helps agencies capture, store and analyze digital evidence. Its products are used by first responders and government agencies around the world to improve incident response, accountability and case management.

Market Cap: $46.4b

Axon Enterprise is attracting attention because it sits at the center of how law enforcement and public safety agencies are modernizing with AI, cloud software and connected devices. Revenue and earnings are expected to grow ahead of the broader US market, supported by strong software and services momentum, larger bundled deals and a reported $15.1b in Future Contracted Bookings. At the same time, the stock trades on a rich valuation and recent results showed margin pressure, negative free cash flow and a fall in adjusted EPS, alongside insider selling and reliance on external funding. For investors, the puzzle is whether Axon’s expanding AI driven platform and international reach can offset these risks and justify that premium.

Axon Enterprise’s accelerating shift to AI driven public safety software is only half the story. The real question is how that growth stacks up against its premium price tag and recent cash flow strain in the analyst forecasts for Axon Enterprise

York Space Systems (YSS)

Overview: York Space Systems is a US based space and defense prime that designs, builds and operates satellites and full mission services for national security and commercial customers, using standardized S-CLASS, LX-CLASS and M-CLASS satellite platforms and software to support constellations across low Earth orbit. The company also runs spacecraft integration and operations, providing customers with an end to end space infrastructure partner.

Operations: York Space Systems generates all of its US$396 million in revenue from Aerospace & Defense activities in the United States.

Market Cap: US$1.5b

York Space Systems sits at the center of the US pivot to proliferated low Earth orbit, with programs like the Space Development Agency’s Tranche 1 Transport Layer already putting more than 40 York satellites on orbit and more launches queued up. Revenue grew 37.7% over the past year. Analysts expect strong top line and earnings growth. The stock trades well below both analyst price targets and Simply Wall St’s estimated cash flow value. The catch is that York is still loss making, carries higher risk funding and faces execution risk as it ramps very high volume manufacturing and integrates acquisitions. For investors comfortable with that volatility, the combination of contract momentum and discounted valuation makes YSS a story worth watching closely.

York Space Systems’ contract momentum, rapid revenue growth and discounted share price hint at a story investors may be underestimating. The real twist is how those strengths compare with execution and funding risk in the analysis report for York Space Systems

Seeking Fresh Alternatives Beyond Defense?

New themes can start moving fast while most investors stay focused elsewhere. Scan fresh stock ideas with real momentum before the crowd catches on and the edge drops. Act now.

• Spot cash generative companies with room to move by running the 52 high quality undervalued stocks that highlights financially strong businesses still priced as if the story has not caught up yet.
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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.