Geopolitical tensions in Eastern Europe are reshaping how investors think about risk and opportunity, particularly as countries like Lithuania and Finland reopen the door to potential nuclear deployments. These moves, alongside a possible build up of U.S. nuclear capable forces on NATO’s eastern flank, are feeding fresh volatility across defense, energy, and broader European equities. For investors, the question is not just who might benefit, but who could be hurt if security concerns keep rising. This article looks at 3 stocks exposed to this news, with 2 potential beneficiaries and 1 that may face tougher headwinds.

Iberdrola (BME:IBE)

Overview: Iberdrola is a large Spanish-based utility that generates and supplies electricity across Europe, the US, Brazil, and other regions using a mix of renewables, nuclear, gas, and battery assets, and also sells related energy services to households and industry. The company is heavily involved in regulated power networks and long term power contracts, tying its fortunes to energy policy and infrastructure spending.

Operations: Iberdrola’s revenue base is widely spread, with about €16.7b from Spain, €9.4b from Brazil, €8.1b from the United States, €7.6b from the United Kingdom and €2.7b from other markets, partly offset by a €1.0b segment adjustment.

Market Cap: €143.3b

Iberdrola appears to be a core renewable and grid-focused utility. For investors, however, the picture is more complicated than recent earnings momentum and global project wins might indicate. Rising geopolitical tension around European energy security, combined with high debt, reliance on supportive regulators in the US, UK and Spain, and a dividend that is not fully backed by free cash flow, leaves limited room for error. The stock trades on a richer P/E multiple than many utilities, while analysts currently indicate only modest upside around prevailing prices and a Neutral stance on the outlook. If optimistic policy and financing assumptions are challenged by a prolonged security or rate shock, Iberdrola could shift from a perceived safe haven to a potential source of portfolio stress.

Iberdrola’s rich P/E, high debt and stretched dividend appear tightly wound together, and the missing piece is how fragile that setup might be if conditions turn against it, so review the Iberdrola financial health report

Leonardo (BIT:LDO)

Overview: Leonardo is an Italian defense and aerospace group that supplies helicopters, military and trainer aircraft, electronics, cyber security, and space systems to governments and industry across Europe, the US, and other international markets.

Operations: Leonardo generates most of its revenue from Defence Electronics & Security at €8.5b and Helicopters at €5.9b, with additional contributions from the Aeronautics Business at €4.4b, Space at €1.0b, Cyber & Security Solutions at €0.8b, and Other Activities at €0.7b. These are partly offset by €1.4b of eliminations.

Market Cap: €29.97b

Leonardo sits at the heart of rising European defense spending, supplying everything from battlefield helicopters to cyber security and air defense electronics to NATO and allied governments. This positioning makes it directly exposed to the nuclear and military build up now being discussed across Eastern Europe. Investors are watching a combination of strong earnings growth, a sizeable order pipeline in higher margin digital and cyber defense, and analyst expectations that the stock trades below their fair value estimates. At the same time, they are weighing concerns about loss making aerostructures, heavier reliance on external borrowing, and recent governance tensions around Italy’s influence on the boardroom. The debate for you is how these moving parts balance out as defense budgets and political scrutiny both increase.

Leonardo’s accelerating defense exposure and digital focus could be masking the real story. Before sentiment and headlines pull away from fundamentals, read the analysis report for Leonardo for the twist many investors may be missing.

RTX (RTX)

Overview: RTX is a large US aerospace and defense company that supplies aircraft engines, missile systems, sensors and electronics, and aftermarket services to commercial airlines, governments, and militaries around the world through its Collins Aerospace, Pratt & Whitney, and Raytheon segments.

Operations: RTX generates most of its revenue from its Raytheon segment at US$28.6b, Pratt & Whitney at US$33.7b, and Collins Aerospace at US$30.6b, partly offset by eliminations and other items of US$2.6b.

Market Cap: US$258.3b

RTX stands out in the current Eastern Europe security backdrop because it already has a US$271b backlog tied to missile defense, radar, and propulsion programs that NATO countries rely on, including NASAMS, Patriot, SPY 6, and F135 engines. Recent multi billion dollar contracts and ongoing capacity expansions in Poland, the US, and Asia point to years of work already in hand, while profit margins and earnings have been improving alongside steady dividend payments. The flip side is high debt, exposure to jet engine reliability costs, and heavy dependence on government budgets, which could hurt if priorities or funding shift. The key consideration is how this mix of contract visibility and balance sheet risk might influence RTX’s role in an extended military build up on NATO’s eastern flank.

RTX’s sizable contracted backlog and improving margins indicate that the story is only partially understood, but the key issue is how its debt and engine risk compare with future orders, so unpack the 4 key rewards and 2 important warning signs

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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.