Government bond yields in the US and Europe have pressed toward multi month highs as investors react to stubborn inflation signals and higher perceived risk in sovereign debt. When borrowing costs reset like this, investors often look harder at sectors tied to long cycle government and commercial contracts. The Aerospace And Defense screener helps you find companies in that space. This article highlights three stocks to watch.

The stocks below are just a starting sample of this Aerospace And Defense idea, and the full screen surfaced 70 more companies with equally compelling narratives that are not covered here. Head straight into the Aerospace And Defense screener to identify, compare, and analyze the highest conviction aerospace and defense plays for your watchlist.

Redwire (RDW)

Redwire is a space infrastructure company that supplies sensors, avionics, payloads, in-space manufacturing capabilities and uncrewed systems for government and commercial customers. It generates roughly US$209 million from its Space segment and about US$217 million from Defense Tech, giving investors a mix of space and defense exposure. The company is valued at around US$3.3b, which places it firmly in mid cap territory.

Redwire gives you direct exposure to government and commercial space projects. Its expanding Defense Tech business and record contracted backlog have attracted fresh attention after recent earnings. At the same time, the company is still reporting losses, relies heavily on government work and has leaned on external funding and dilution, so execution on large contracts and cost control matter a lot. If you are looking at space and defense plays with emerging pharma in space and UAS angles, Redwire is a story worth monitoring more closely.

Redwire’s mix of space infrastructure and Defense Tech contracts can look like pure upside, yet the losses and funding needs keep the full picture murky. Get the 2 key rewards and 3 important warning signs (2 are major!) to see what could tip the story next.

Build your own space and defense contract shortlist

Redwire and the two other stocks in this article all surfaced from a single Simply Wall St screen, but the real edge comes from tailoring your own filters. Use our flexible Screener to mix metrics like valuation, future growth, balance sheet quality and risks, or tap into our curated Investing Ideas for ready made starting points.

Rocket Lab (RKLB)

Rocket Lab is a space company that provides small and medium class rocket launches, spacecraft manufacturing, and on orbit management services for commercial, government, and aerospace contractor customers. It currently generates about US$544 million from its Space Systems segment and around US$225 million from Launch Services, so most revenue comes from building and operating satellites rather than just firing rockets. The stock is valued at roughly US$47.9b, which puts Rocket Lab firmly in large cap territory.

Rocket Lab sits at the center of the growing space infrastructure build out, with its Electron rocket already serving commercial and defense launch customers and its Neutron rocket aimed at larger constellation and government missions. The company has record revenue and backlog, new Space Force contracts and plans for the Iridium acquisition and GHOST rapid launch system. Together, these elements point to a much bigger platform than a pure launch provider. The catch is that Rocket Lab is still loss making, relies on external funding and has seen recent dilution and insider selling, so the path to profitability, Neutron timing and integration of Iridium are all pressure points. For investors seeking exposure to the space economy’s backbone rather than just one off launches, Rocket Lab is a story that may warrant closer examination.

Rocket Lab looks like a space infrastructure platform in the making, not just a launch stock. Before you decide where it fits in your watchlist, read the analysis report for Rocket Lab for the crucial twist in the story.

Kratos Defense & Security Solutions (KTOS)

Kratos Defense & Security Solutions is a defense technology company focused on unmanned aerial systems, hypersonic and rocket systems, satellite ground software, and advanced electronics for U.S. and allied government customers. Most revenue comes from Kratos Government Solutions at about US$1.21b, with Unmanned Systems contributing around US$317 million, giving the company a mix of software, hardware, and high end drone platforms. The stock has a market cap of roughly US$11.8b, putting it in mid to large cap territory for the sector.

Kratos offers exposure to some of the most sensitive areas of defense spending, from hypersonics to jet powered drones. Recent contract wins and tariff tailwinds on foreign drones have kept interest high. Earnings growth has been strong and margins are improving; yet the stock trades at a rich valuation and relies heavily on government budgets and external funding, which can pressure cash flow and add volatility. For investors looking at higher growth defense stocks rather than traditional contractors, Kratos is a story that may deserve a closer look to see whether the growth outlook justifies the current price and balance sheet risk profile.

Kratos appears to be a rapidly evolving defense story, where hypersonics and high-end drones may be masking a crucial tension between growth and reliance on budgets. Read the 2 key rewards and 1 important warning sign

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.