Aerospace And Defense Stocks To Watch For Long Term Contract Exposure

Global bond markets are under pressure as 10 year yields in major regions move to multi year highs, reflecting concerns about inflation and fiscal strain. When borrowing costs rise, investors often pay closer attention to companies tied to long term government and defense contracts. This article looks at three stocks from the Aerospace And Defense screener that could help you explore this theme in a more targeted way.

The stocks covered below are just a starting sample, and the full screen surfaced 308 more Aerospace and Defense companies with equally compelling narratives that are not covered in this article. To go deeper into this theme, head straight to the Aerospace And Defense screener to identify, filter, and analyze the ideas that best fit your own conviction.

Rheinmetall (XTRA:RHM)

Rheinmetall is a €56.7b German defense company best known for its combat vehicles, weapon systems, and air defense technologies, which tie it directly to long term aerospace and defense procurement. The business is heavily skewed to its Vehicle Systems and Weapon and Ammunition segments, which together generated about €9.5b in revenue, while other activities and consolidation effects play a smaller role. This focus gives Rheinmetall meaningful exposure to government defense budgets without being limited to a single product line.

For investors looking at the Aerospace and Defense theme, Rheinmetall offers a mix of long term vehicle and ammunition contracts, a growing backlog in areas like air defense and missiles, and partnerships with major players such as Boeing and other OEMs. The flip side is meaningful reliance on European defense spending and complex expansion projects that could strain operations or cash flow if approvals or demand fall short. If you want exposure to defense rearmament through a company with scale, contract visibility, and some execution and funding risks to weigh, Rheinmetall is worth a closer look.

Rheinmetall’s expanding backlog and long term contracts hint at a story that many investors may only be seeing half of. The real question is how those commitments intersect with its balance sheet, cash demands, and future optionality in the Rheinmetall financial health report

Build your own defense contract shortlist

Rheinmetall and the two other stocks in this article all came from the same screener, but the real advantage is setting your own rules. Use our Screener to mix filters like valuation, growth, balance sheet strength, risks, and dividends, or tap into our ready made Investing Ideas for curated starting points.

Redwire (RDW)

Redwire is a US$3.4b space infrastructure company that designs and manufactures hardware such as star trackers, sun sensors, antennas, spacecraft platforms, and in space manufacturing and biotech facilities that plug directly into government and commercial aerospace and defense programs. Its business is split between Space, which generated about US$209 million of revenue, and Defense Tech at roughly US$217 million, giving it a fairly balanced mix across civil and defense focused customers.

Redwire provides exposure to activity in military and civil space projects, from NATO backed uncrewed systems to nearly US$1b-scale U.S. Space Systems Command awards, along with newer microgravity biotech ventures that could open up additional revenue streams. At the same time, the company is still loss making, carries funding and dilution risks, and relies heavily on complex government contracts. For investors looking at a focused space and defense hardware company with notable contract activity but also execution and balance sheet uncertainties, Redwire may merit closer examination later in this article.

Redwire’s mix of civil and defense space contracts is only half the story. The real tension is how its funding needs and contract pipeline fit together in the analysis report for Redwire

Kratos Defense & Security Solutions (KTOS)

Kratos Defense & Security Solutions is a US$12.1b defense technology company best known for its unmanned aerial systems, jet powered drones, loitering munitions, missile propulsion, and related command and control and counter UAS systems, which tie it directly to the Aerospace and Defense theme. The business leans heavily on its Kratos Government Solutions segment, which generated about US$1.2b of revenue, while Unmanned Systems contributed around US$317 million, reflecting a mix of enabling subsystems and front line unmanned platforms. For investors, Kratos’ scale in defense contracts is now matched by a large market value that puts it firmly in the mainstream of listed defense contractors.

Kratos operates at the sharp end of defense modernization, supplying jet powered drones, hypersonic systems, and propulsion for missiles and loitering munitions that are already winning complex contracts, from Valkyrie UAS trials to engines used in JASSM. That growth story comes with trade offs, including heavy spending on new facilities, reliance on a concentrated set of suppliers, and a balance sheet shaped by higher risk borrowing rather than customer prepayments. For investors who want direct exposure to next generation unmanned and missile platforms and are comfortable weighing premium valuation, funding risk, and insider selling against contract momentum, Kratos is a company that deserves a deeper look later in this article.

Kratos may appear to be driven purely by contract momentum on the surface, but its spending patterns, supplier dependence, and funding choices reveal a more complex picture. Read the 2 key rewards and 1 important warning sign

Seeking Alternatives Before The Crowd Moves

Fresh ideas move first. By the time momentum shows on charts, early entries are already flying. Scan these focused stock lists while it matters and consider potential opportunities earlier in the process.

• Target companies with stronger cash generation and steadier balance sheets by running a custom filter through the list of solid balance sheet and fundamentals (434 results) before pricing fully reflects those characteristics.
• Look for potential long term income opportunities by checking the curated 433 dividend fortresses while yields and payout strength may still be less widely followed.
• Explore AI-related companies that already report profits by screening the 74 profitable AI stocks that aren't just burning cash before valuations and entry points change.

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.

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