Global manufacturing is picking up, with Eurozone factory activity and confidence improving, and that can keep demand for aircraft, defense hardware and related services on investors’ radar. When industrial cycles turn, capital often flows toward businesses tied to long lead time projects. This article looks at the Aerospace and Defense screener and highlights three stocks that could help investors position around this theme.

The three stocks in this article are just a starting sample, and the full Aerospace And Defense screen surfaced 72 more companies with equally compelling stories that are not covered here. If you want to go broader and tailor ideas to your own risk profile, head straight to the Aerospace And Defense screener to analyze, compare, and identify potential high-conviction plays in this theme.

Redwire (RDW)

Redwire is a space infrastructure and defense tech company that supplies spacecraft hardware such as star trackers, sun sensors, cameras, RF payloads, antennas, and full spacecraft platforms, as well as in-space manufacturing and microgravity services for government and commercial programs. Revenue is fairly balanced between its Space segment at about $208.9 million and its Defense Tech segment at about $217.4 million, so aerospace and defense exposure is meaningful but not the only pillar of the business. Redwire has a market cap of roughly $2.9b, which puts it in the smaller end of the listed Aerospace and Defense peer group.

Investors looking for pure space exposure with a clear Aerospace and Defense angle may find Redwire interesting because its core business supplies mission critical spacecraft systems and microgravity services to agencies such as the U.S. Department of War, NATO partners, and civil space programs. Record backlog, fresh contracts with Space Systems Command and NATO drone programs, and expansion of facilities for microgravity manufacturing suggest a pipeline that could support future revenue visibility. The trade off is that Redwire is still loss making, has relied on external funding and share issuance, and carries execution risk on complex fixed price space and UAS contracts. If Redwire can turn that growing backlog into consistent cash generation, the combination of space infrastructure, defense UAS exposure and earlier stage pharma-in-space platforms could look very different to investors than it does today.

Redwire’s growing backlog and dual space defense exposure could be masking what really matters for long term investors. Before the story shifts again, review the 2 key rewards and 3 important warning signs (2 are major!)

Build your own space and defense shortlist

Redwire and the two other stocks in this article all surfaced from a single Simply Wall St screen, but your next idea does not need to be limited to this trio. Use our customisable Screener to mix filters such as valuation, future growth, balance sheet strength and risks, or tap into any of our curated Investing Ideas for a quicker starting point.

Rocket Lab (RKLB)

Rocket Lab is a space company that gives you direct exposure to the Aerospace and Defense theme through its Electron orbital launch services and development of the larger Neutron rocket for government and commercial satellite missions. Most revenue currently comes from its Space Systems segment at about $544 million, with around $225 million from Launch Services, reflecting a business that not only flies spacecraft but also designs and builds the satellites and subsystems that go on top. The company has a market cap near $43.7b, which puts Rocket Lab among the larger listed space players.

Rocket Lab sits at the point where launch services, satellite manufacturing and defense contracts meet, with Electron and the upcoming Neutron vehicle targeting repeat government missions and large constellations. The company has built a sizeable backlog and is expanding into secure space networks and satellite communications through recent Space Force wins and the pending Iridium deal, but it is still loss making and relies on external funding and share issuance. If Rocket Lab can turn its launch cadence and growing Space Systems work into durable cash generation while executing on Neutron, the balance between opportunity and risk may look very different to investors than it does today.

Rocket Lab’s growing launch and satellite footprint suggests a story that many investors may only be half seeing. Get the full picture, including where the pressure points may sit next, in the analyst forecasts for Rocket Lab

Kratos Defense & Security Solutions (KTOS)

Kratos Defense & Security Solutions is a defense technology company best known in the Aerospace and Defense theme for its jet powered unmanned aerial systems and propulsion systems used in drones, missiles and spacecraft, alongside satellite ground control and microwave electronic systems for military customers. It generates about US$317 million from Unmanned Systems and roughly US$1.2b from Kratos Government Solutions, reflecting a broad mix of hardware and software tied mainly to national security programs. Kratos has a market cap of about US$10.5b.

Investors watching the Aerospace and Defense theme may want Kratos on their radar because it combines front line exposure to unmanned combat aircraft, hypersonic propulsion and satellite ground systems with a large and growing bid pipeline. Recent updates show the company scaling facilities for Valkyrie drones and small jet engines while working with partners like GE Aerospace and Lockheed Martin on missile and hypersonic propulsion, which could deepen its role on long running defense programs. The trade off is heavy investment and reliance on a concentrated government customer base, which can pressure free cash flow and make results more sensitive to contract timing. For investors willing to track program execution and funding closely, Kratos offers a tightly focused way to follow how next generation defense platforms are being built.

Kratos appears to be an accelerating defense story that many investors may still be underestimating, with unmanned jets and hypersonics in focus while one crucial piece of the thesis remains overlooked in the 2 key rewards and 1 important warning sign

Seeking Alternatives Beyond Aerospace Plays

Fresh ideas do not stay under the radar for long. Once momentum builds, entry points can feel like they are flying past. Check these screens before the crowd and act now.

• Target reliable cash flow while others chase stories by scanning the 12 dividend fortresses that have been curated for income investors who care about durability before yield starts dropping.
• Spot potential breakout enablers of AI infrastructure early by reviewing the 55 AI infrastructure stocks before they move from under the radar for now to firmly on everyone’s watchlist.
• Get ahead of the next wave in robotics by tracking the 37 robotics and automation stocks that could build momentum while it still pays to be the first mover.

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.