Global manufacturing is showing signs of renewed strength in Europe, with Germany’s manufacturing PMI at its strongest level since 2022 and France returning to growth. That hints at steadier demand for complex equipment and services, which can matter for Aerospace And Defense stocks. This article walks through three stocks from our Aerospace And Defense screener that may help you consider this backdrop.

The three Aerospace And Defense stocks covered next are only a small sample, as the full screen surfaced 308 more companies with equally compelling business stories that are not discussed here. If you want to go straight to the source and identify ideas that fit your own criteria, head into the Aerospace And Defense screener.

Rheinmetall (XTRA:RHM)

Rheinmetall is a €53.9b German group that is firmly rooted in Aerospace and Defense through its Vehicle Systems and Weapon and Ammunition segments, which supply armored vehicles, artillery, air defense, radar and munitions, as well as electronic command and training systems to army, air force and navy customers worldwide. Vehicle Systems generated about €5.5b of revenue and Weapon and Ammunition about €4.0b, with additional contributions and adjustments from other activities and consolidation. That scale, together with a broad international footprint, makes Rheinmetall one of the larger pure defense manufacturers in Europe.

Rheinmetall gives you exposure to core defense hardware that sits at the center of many current procurement programs, from armored vehicles and ammunition to air defense, backed by an €80.4b order backlog that provides multi year revenue visibility. The company also has high reported profitability metrics, such as a strong return on equity, and is pushing deeper into electronics, drones and missiles through partnerships with groups like Lockheed Martin, Boeing and Destinus. The trade off is meaningful balance sheet risk from high debt and the fact that a large share of orders are tied to European government budgets and political decisions, which can change. Investors who want to understand how that mix of growth potential and policy risk might play out over time may find Rheinmetall worth a closer look.

Rheinmetall’s €80.4b backlog and high reported returns suggest a story that could be bigger than just armored vehicles and munitions. See how the 3 key rewards and 2 important warning signs might change the way you think about its next chapter

Build your own defense opportunity shortlist

Rheinmetall and the two other stocks in this article all came from a single screener, which is exactly how you can start building your own set of ideas. Use our flexible Screener to mix filters like valuation, quality, balance sheet strength and risks in a way that fits your style, or lean on the starting points in our curated Investing Ideas.

Redwire (RDW)

Redwire is a US$3.0b space technology company that supplies hardware and services used directly in aerospace and defense missions, from star trackers, sun sensors and RF payloads that guide and connect spacecraft, to in space manufacturing facilities and uncrewed airborne systems. It splits its business between Space, which generated about US$208 million of revenue, and Defense Tech at about US$217 million, giving investors exposure to both orbital infrastructure and airborne defense systems. For context, Redwire reported most of its US$426 million or so of revenue through these two segments across the United States, Europe and other markets.

Redwire provides direct exposure to the build out of space infrastructure that defense and civil agencies rely on for navigation, communications and surveillance, but the story is not straightforward. The company has reported record backlog, new facilities focused on microgravity manufacturing and recent contract wins with NATO customers and Space Systems Command, which together indicate demand for its hardware and services. At the same time, Redwire is still loss making, depends heavily on government contracts and carries funding and dilution risks that are important to weigh. For investors assessing whether that mix of contract momentum, unproven ventures such as space based pharmaceuticals and a premium valuation aligns with their risk tolerance, Redwire may warrant further research.

Redwire’s accelerating contract wins and record backlog could be masking something investors have not fully priced in yet. Scan the 2 key rewards and 3 important warning signs (2 are major!) to see how its contract momentum lines up with funding risk and future dilution potential.

Rocket Lab (RKLB)

Rocket Lab is a US space company focused on launch services for small and medium satellites, an activity that directly serves commercial and government Aerospace and Defense programs through its Electron rocket and in-development Neutron vehicle. Around US$225 million of revenue comes from launch services, while about US$544 million is generated by its larger Space Systems segment, which supplies spacecraft, components and on-orbit services to customers that include aerospace contractors and government agencies. Rocket Lab has a market cap of roughly US$43.4b.

Rocket Lab gives you pure play exposure to the build-out of space as critical infrastructure for defense and communications, from frequent Electron launches to future Neutron missions and on-orbit services. The company is still loss making and depends heavily on external funding and shareholder dilution, yet has a growing stream of U.S. Space Force contracts, expanding Space Systems work and a plan to vertically link launch, satellites and communications. If the shift toward profitability and execution on Neutron and recent contract wins go right, investors who only know Rocket Lab as a small launcher may be missing a much bigger Aerospace and Defense story.

Rocket Lab’s expanding launch and Space Systems revenue hints at a story investors may be underestimating. See how the analyst forecasts for Rocket Lab ties its contract wins, funding needs, and the real path to scale.

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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.