Energy prices linked to the Iran US stand off are keeping inflation concerns alive, which keeps attention on sectors tied to national security and critical infrastructure. Aerospace and defense stocks sit at the heart of that conversation. For investors, this screener highlights companies connected to long term security needs rather than short term consumer cycles. This article walks through 3 stocks from the Aerospace And Defense screener to watch now.

The 3 stocks covered next are just a sample of the opportunities in this space, and the full screen surfaced 305 more aerospace and defense companies with equally compelling narratives that are not covered here. To identify and analyze the highest conviction ideas for your own watchlist, head straight into the Aerospace And Defense screener.

Red Cat Holdings (RCAT)

Red Cat Holdings is a US based defense technology company that designs and manufactures small tactical drones and uncrewed surface vessels for military, security, and industrial customers, including its BLACK WIDOW, TEAL 2 and FANG platforms. The company reports around $71 million in revenue from Recreational Products, all generated in the United States, and has a market cap of about $1.7b.

Investors looking at Red Cat Holdings are essentially looking at a pure play on US made autonomous systems, at a time when policy support and tariffs are pushing attention toward domestic suppliers. The company is leaning into defense focused drones and Blue Ops surface vessels, supported by partnerships with groups like Palantir and AeroVironment, and a growing production footprint in Georgia, Salt Lake City and Los Angeles. At the same time, Red Cat carries clear risks, including ongoing losses, a very high P/S multiple, recent insider selling and shareholder dilution. For investors who can tolerate volatility and execution risk, the combination of its current contract activity, scale up ambitions and still evolving profitability profile makes RCAT a complex idea that may warrant close study.

Red Cat Holdings sits at the crossroads of rising US demand for autonomous defense systems and investor concern over losses and dilution. To see how that tension shows up in the 1 key reward and 4 important warning signs (2 are major!)

Build your own defense and autonomy stock shortlist

Red Cat Holdings and the other two stocks in this article all came from a single screener, but the real edge for you is building filters that fit your own approach. Use our flexible Screener to combine metrics like valuation, growth, balance sheet strength and risks, or lean on the curated themes in our Investing Ideas.

Redwire (RDW)

Redwire is a space infrastructure and defense technology company that supplies sensors, avionics, in-space manufacturing, and uncrewed aerial systems to government and commercial customers. It generates about $209 million from its Space segment and $217 million from Defense Tech, giving it a relatively balanced mix between orbital platforms and defense focused technologies. The company has a market cap of around $3.4b.

Redwire gives you exposure to record space and defense contract activity, including a rising backlog tied to U.S. and NATO programs, at the same time as it is still working through losses and equity dilution to fund growth. The stock sits at the intersection of higher margin in-space manufacturing and pharmaceuticals via SpaceMD, established UAS platforms like Penguin Mk3 and Stalker, and newer facilities in Huntsville and Indiana that are being built out to support that demand. The catch is clear. Redwire is unprofitable, reliant on volatile government awards, and its P/S and recent capital raises leave little room for disappointment, which is exactly why understanding how those contracts convert into cash and margins over the next few years matters so much.

Redwire’s contract momentum and in-space manufacturing story can look exciting, yet the real twist may sit inside the 2 key rewards and 3 important warning signs (2 are major!)

Rocket Lab (RKLB)

Rocket Lab is a Long Beach based space company that provides launch services and space systems, including rocket design, manufacturing, spacecraft components and on orbit management for commercial, government and aerospace customers. It currently generates about $544 million from its Space Systems segment and $225 million from Launch Services, which puts more revenue weight on satellites, spacecraft and related services than on launches themselves. The stock has a market cap of about $48 billion.

Rocket Lab sits at the center of efforts to build a full service space infrastructure company, with Electron already flying regularly and the Neutron medium lift rocket and GHOST deployable launch system aiming to widen its role in defense and commercial constellations. The stock is tied to an aggressive growth story, including a large Iridium acquisition, a record multi billion backlog and analyst expectations for revenue and earnings growth. It is still loss making, reliant on external borrowing and carrying execution risk around Neutron timing and integration of new contracts. For investors comfortable with volatility and funding risk, the mix of fast growing space systems revenue, expanding government work and a push toward vertical integration makes Rocket Lab a company that may deserve a closer look beyond the headline story.

Rocket Lab’s push toward full service space infrastructure is only half the story. The real question is how the current contracts and funding needs tie into future performance in the analyst forecasts for Rocket Lab

Seeking Fresh Alternatives Beyond Defense?

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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.