With global PMIs pointing to pockets of improving growth, energy costs still volatile and trade tariffs back in focus, many investors are looking for stocks linked to long-cycle spending and government-backed budgets. The Aerospace And Defense screener filters for companies that manufacture hardware or provide services to these sectors, helping you focus on businesses tied to security, aviation and critical infrastructure. This article highlights 3 of the best stocks from that screener, using today’s macro signals as a backdrop so you can quickly see which opportunities might deserve a closer look.

General Dynamics (GD)

Overview: General Dynamics is a large aerospace and defense company that builds Gulfstream business jets, nuclear submarines, surface ships, armored vehicles and advanced IT and mission systems for government and commercial customers worldwide.

Operations: General Dynamics generates most of its revenue from Marine Systems (US$17.5b), Technologies (US$13.6b), Aerospace (US$13.4b) and Combat Systems (US$9.4b), with the United States contributing about US$44.6b of sales.

Market Cap: US$100.8b

Investors watching long cycle defense and aerospace spending may consider General Dynamics, which combines a record backlog in submarines and Gulfstream jets with a broad technologies arm focused on cyber, secure communications and IT modernization. The stock currently trades on a P/E that screens as good value versus peers, while also offering a dividend and a history of positive earnings surprises. At the same time, analyst forecasts indicate that growth in revenue and earnings is expected to trail the wider US market, and the company carries meaningful net debt funded through external borrowing. Execution on complex shipbuilding programs, supply chain stability and contract timing in its Technologies segment are likely to be important factors that could make the current valuation appear either more attractive or more demanding over time.

General Dynamics’ mix of record backlogs, a P/E that screens as good value, and a meaningful debt load raises a simple question: Is the current price compensating you for the real trade offs in this story or not, according to the DCF valuation analysis for General Dynamics?

L3Harris Technologies (LHX)

Overview: L3Harris Technologies provides mission critical communications, space, and missile solutions, supplying satellites, tactical radios, sensors, and propulsion systems that support defense, civil government, and public safety customers worldwide.

Operations: L3Harris reports a segment adjustment of US$22.5b and generates about US$17.5b of revenue from the United States and US$5.0b from international markets.

Market Cap: US$53.1b

L3Harris Technologies operates in aerospace and defense with a mix of missile tracking satellites, advanced communications gear, and propulsion capacity, underpinned by contracts with the U.S. Space Force, Army and FAA. Recent wins in missile warning satellites, rocket motors and aircraft tracking, together with the LHX NeXt efficiency program, are noted by analysts in the context of earnings expectations and margin trends, while the stock is sometimes compared with peers on P/E and DCF estimates. At the same time, high debt, fixed price development contracts and dependence on larger contractors introduce execution and funding risk. The possible IPO of the Missile Solutions business is another factor that investors in L3Harris may wish to understand in detail.

L3Harris looks like a stock where high stakes missile, space and communications projects could be masking the real story, and the 6 key rewards and 1 important warning sign might reveal why the next chapter is not what most investors expect

Northrop Grumman (NOC)

Overview: Northrop Grumman is a large aerospace and defense technology company that supplies aircraft, missile and tactical weapons, advanced electronics, cyber and mission systems, and space hardware like satellites and launch systems to U.S. and international government customers.

Operations: Northrop Grumman generates most of its revenue from Aeronautics Systems (US$13.9b), Mission Systems (US$12.7b), Space Systems (US$10.8b) and Defense Systems (US$8.2b), with the United States contributing about US$36.8b of sales alongside smaller but meaningful revenue from Europe and Asia/Pacific.

Market Cap: US$74.6b

Northrop Grumman is positioned at the center of long term deterrence and space programs, with record backlog of US$105b, recent awards on Sentinel, B 21 and F 35, and a plan to roughly double international sales by 2031. The stock trades on a P/E that screens as low relative to the wider Aerospace & Defense group and a consensus price target that is higher than today’s share price. At the same time, high debt, margin pressure in Defense and Space, and heavy reliance on a few large U.S. contracts mean execution and policy risk are material considerations. The tension between that backlog, reported 10.5% net margin and 25.1% ROE on one side, and program and funding risk on the other, is a key factor investors may monitor.

Northrop Grumman’s record US$105b backlog, 25.1% ROE and a P/E that screens as low versus peers suggest something in this story is decoupling from the crowd, and the 4 key rewards and 1 important warning sign could show where the real pressure point sits

The three stocks covered here are only a starting point, since the full Aerospace And Defense screener flags 299 more companies with equally compelling Aerospace And Defense stories that you have not seen yet. Use Simply Wall St to unlock, identify and analyze the specific catalysts, contract profiles and risk reward narratives that matter most to you so you can focus on the highest conviction ideas in this sector.

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If General Dynamics or any of these companies have caught your attention, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value and track any new developments as they happen. Once you've made your move, manage your holdings with our Portfolio Command Center that filters out the noise to deliver only the most critical, actionable updates. Throughout your journey, our Community allows you to filter the best ideas from thousands of investor perspectives. By uncovering hidden catalysts and risks early, you'll accelerate your decision-making and stay one step ahead of the market.

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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.