Geopolitical shocks can change market drivers overnight, and the latest missile and drone attacks in Eastern Europe are a reminder that conflict risk is also investment risk. When military and energy infrastructure are hit, capital often shifts toward companies directly exposed to the news, whether through defense technologies, fuel supply, or critical services. This article breaks down 3 stocks from our Defense and Energy Stocks With Geopolitical Upside Exposure screener that appear positively exposed to the current tensions. The goal is to help you decide whether these types of stocks deserve closer examination or should be given a wider berth in your portfolio.

Lockheed Martin (LMT)

Overview: Lockheed Martin is a large US aerospace and defense contractor that designs and builds fighter jets, missile and air defense systems, helicopters, satellites, and space systems for the US government and allied militaries around the world.

Operations: Lockheed Martin generates most of its revenue from Aeronautics at about US$30.5b, Missiles and Fire Control at about US$15.7b, Rotary and Mission Systems at about US$19.4b, and Space at about US$13.6b, with the United States accounting for about US$53.0b of sales and the rest coming from Europe, Asia Pacific, the Middle East, and other regions.

Market Cap: US$117.5b

Investors looking at Lockheed Martin are getting exposure to one of the key suppliers of air and missile defense systems at a time when real conflict in Eastern Europe is reinforcing how critical these capabilities are, from THAAD and PAC-3 to new counter drone solutions. The company combines a large backlog and steady contracts in missiles, radar and space with a long history in programs like the F 35, yet still faces pressure from cost overruns on legacy projects, high debt levels and slower revenue growth than the broader market. With recent multi billion dollar contracts and increased munitions capacity coming online, the key consideration is how those positives balance against margin risk and budget shifts for a long term holder.

Lockheed Martin’s huge backlog and fresh multi billion dollar contracts could be masking the real story. See how the 4 key rewards and 1 important warning sign might reshape your view of its long term risk reward equation.

Northrop Grumman (NOC)

Overview: Northrop Grumman is a US based aerospace and defense company that builds aircraft, drones, missile and air defense systems, radar and communications gear, and space hardware for the US and allied governments.

Operations: Northrop Grumman generates most of its revenue from Aeronautics Systems at about US$13.5b, Mission Systems at about US$12.6b, Space Systems at about US$10.7b, and Defense Systems at about US$8.1b, with the United States contributing about US$36.4b of sales and the rest coming mainly from Europe and Asia Pacific.

Market Cap: US$72.3b

Northrop Grumman operates in areas that many investors are focused on right now, including advanced drones, missile defense, and space systems that governments use when conflict risk rises. The company is closely tied to high priority US programs such as the B 21 bomber and Sentinel missile system, and already reports double digit net margins with a return on equity around 26.7%. It also carries a meaningful debt load and depends heavily on a handful of large contracts that could be affected by delays or political shifts. With Russia’s renewed missile and drone strikes in Eastern Europe highlighting the need for airspace security and intercept capabilities, a key consideration for investors is whether current earnings, valuation, and recent product milestones such as the Jackal missile test reflect that backdrop or leave a margin of safety for long term portfolios.

Northrop Grumman’s mix of double digit net margins and exposure to high priority defense programs looks powerful, but the real story may be how future contracts reshape expectations in the analyst forecasts for Northrop Grumman

BP (LSE:BP.)

Overview: BP is a large integrated energy company that produces and trades oil and gas globally while also running fuel retail, EV charging, lubricants, and growing solar, wind, hydrogen and bioenergy businesses.

Operations: BP generates most of its revenue from Customers & Products at about US$155.6b, with Gas & Low Carbon Energy at about US$39.0b and Oil Production & Operations at about US$24.0b.

Market Cap: £70.4b

BP sits at the center of geopolitics and energy security. The latest attacks on fuel and power infrastructure in Eastern Europe, and the potential for higher oil price volatility, put its upstream refocus and big trading arm in the spotlight. The company has only recently become profitable again and carries funding and governance questions, including a one off $4.9b loss, insider selling and leadership turnover. Analysts still see upside, supported by a 5.5% dividend yield and projects such as new UAE and Azerbaijan gas exposure. If you want to understand how that mix of opportunity and risk might play out as BP refines its portfolio and reacts to heightened geopolitical tension, you will need more than just the headlines.

BP’s refocused upstream and 5.5% dividend yield could be masking a sharper turn in its risk profile and energy transition plan, and the analysis report for BP might highlight the one factor many investors are still overlooking

Take Control of Your Investment Journey

If Northrop Grumman or any of these companies sound like a great opportunity, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value the ideal entry point. 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.

Seeking Fresh Alternatives Beyond Defense?

Fresh ideas can move from quiet to breakout quickly, and once momentum is flying, ideal entry points can be difficult to find. Scan these under the radar picks and consider whether they fit your strategy.

• Target steadier portfolio anchors by reviewing a curated 73 resilient stocks with low risk scores that may hold up better when volatility spikes and headlines turn chaotic.
• Explore potential compounding income by zeroing in on a hand picked 8 dividend fortresses built for investors who want cash flow working in the background.
• Stay informed on infrastructure developments by checking a focused 35 power grid technology and infrastructure stocks that filters companies tied to core grid upgrades and electrification trends.

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.