With global growth signals mixed, inflation expectations still in focus and geopolitical tensions influencing energy and trade flows, many investors are looking at sectors linked to long-term government spending and essential security needs. The Aerospace and Defense screener focuses on companies that manufacture or provide services to this core part of the economy, an area closely tied to policy priorities rather than just short term consumer demand. This article highlights 3 stocks from the Aerospace and Defense screener that stand out on current fundamentals, helping you quickly shortlist ideas for deeper research.

CSG (ENXTAM:CSG)

Overview: CSG N.V. is a Prague based defense group that supplies ammunition, armored vehicles, radars, air defense systems and propulsion solutions for missiles and unmanned aircraft to military, law enforcement and civilian buyers across Europe, the United States and the Asia Pacific.

Operations: CSG generates about €1.32b in revenue from its Ammo+ division, primarily through small calibre ammunition for pistols, rifles, shotguns and related products.

Market Cap: €12.68b

CSG gives investors exposure to a vertically integrated European defense supplier that is already securing large ammunition and air defense contracts with NATO and other government customers. Some models flag the shares as trading well below estimated fair value. Earnings growth has been strong in recent years and analyst forecasts indicate expectations of further gains, supported by a pipeline of long range artillery, air defense and armored vehicle programs. At the same time, high leverage, debt that is not well covered by operating cash flow and a relatively new board raise questions about how the group will balance rapid expansion with balance sheet strength and governance discipline. This is an area where deeper research can be particularly valuable.

CSG’s vertically integrated ammo and air defense story looks powerful, but the real question is whether the current price fully reflects that mix of contracts, leverage and board turnover, so review the 4 key rewards and 2 important warning signs (2 are major!)

Rocket Lab (RKLB)

Overview: Rocket Lab is a Long Beach based space company that provides launch services and space systems, designing and building small and medium class rockets, satellites, components and software for commercial, government and aerospace customers worldwide.

Operations: Rocket Lab generates about US$452.5m from its Space Systems segment and around US$227.1m from Launch Services, with space hardware and services currently the larger revenue driver.

Market Cap: US$46.71b

Rocket Lab offers investors exposure to the shift toward smaller, more frequent launches and an end to end space platform. This is alongside real risks, including ongoing losses, a balance sheet fully funded by external capital, insider selling, shareholder dilution and share price volatility that can punish any execution missteps. For investors focused on Aerospace and Defense, the combination of defense related missions, Nasdaq 100 inclusion and space systems expansion makes Rocket Lab notable, but it is crucial to weigh these potential drivers against the funding and valuation pressures built into the stock.

Rocket Lab’s push to become an end to end space platform is impressive, but the real story sits in how markets are pricing that ambition against funding risks, so review the 1 key reward and 3 important warning signs

Kratos Defense & Security Solutions (KTOS)

Overview: Kratos Defense & Security Solutions is a San Diego based defense technology company that builds jet powered unmanned drones, hypersonic and rocket systems, satellite ground software, propulsion systems and electronic products for U.S. national security agencies and international government and commercial customers.

Operations: Kratos Defense & Security Solutions generates about US$1.42b in revenue, with roughly US$1.10b from Kratos Government Solutions and US$311.5m from Unmanned Systems, and most revenue coming from the United States.

Market Cap: US$8.68b

Kratos Defense & Security Solutions sits at the intersection of drones, hypersonics and space infrastructure, with earnings that grew 51% in the past year. High quality earnings signals, rising margins and an expanding backlog in unmanned systems and missile programs are attracting attention, especially as new contracts such as the Space Force ground infrastructure work and the Abu Dhabi manufacturing venture broaden its reach. At the same time, a rich P/S multiple, recent insider selling, higher risk funding and low current ROE mean investors need to think carefully about how much growth is already reflected in the price and how durable that growth path might be.

Kratos Defense & Security Solutions sits at the crossing point of drones, hypersonics and space. Yet the real story may be what current pricing assumes about that growth path, so review the 2 key rewards and 1 important warning sign

The three stocks here are a starting point, and the full Aerospace And Defense screener uncovered 297 more companies with equally compelling stories that could fit very different portfolio goals. It is worth seeing how the rest stack up in terms of size, focus and risk. To identify and analyze the highest conviction ideas linked to the catalysts discussed above, head to the Aerospace And Defense screener where you can filter for factors like contract exposure, funding profile and earnings quality to match your own thesis.

Take Control of Your Investment Journey

If CSG 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.