Buy 5 Aerospace Defense Stocks for Second-Half 2025 on Growing Demand

The aerospace defense industry has maintained its northbound journey amid supply-chain woes. Increased defense budget by the U.S. administration and impressive year-over-year projections for global air passenger numbers are likely to boost this space in the second half of 2025.

At this stage, it will be prudent to invest in aerospace defense industry stocks with a favorable Zacks Rank for the rest of 2025. Five such stocks are: GE Aerospace GE, Howmet Aerospace Inc. HWM, Leidos Holdings Inc. LDOS, Huntington Ingalls Industries Inc. HII and Vertical Aerospace Ltd. EVTL. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Growing Demand for Aerospace Defense Industry

While the commercial aerospace market overcame the woes of the pandemic and has been growing steadily over the past couple of quarters, the defense side of the industry stood its ground amid the COVID-19 crisis, cushioned by steady government support.  

To this end, it is worth noting that in May 2025, a White House report was published stating that President Donald Trump has proposed a 13% increase in the nation’s defense spending to $1.01 trillion for fiscal year 2026.  

Such improved funding provisions set the stage for industry players focused on the defense business to win more contracts and expand their production volume, which is likely to boost their top line.

The Zacks-defined Aerospace – Defense Industry is currently in the top 16% of the Zacks Industry Rank. Since it is ranked in the top half of the Zacks Ranked Industries, we expect the aerospace defense industry to outperform the market over the next three to six months.

The chart below shows the price performance of our five picks in the past three months.

GE Aerospace

GE Aerospace has been witnessing strength in its businesses, driven by robust demand for commercial engines, propulsion and additive technologies. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel augur well for the company. 

GE’s portfolio-reshaping actions are likely to unlock values for its shareholders. GE raised its dividend by 28.6% to 36 cents per share in February 2025. For 2025, GE expects organic revenues to grow in the low-double-digit range from the year-ago level.

GE Aerospace has an expected revenue and earnings growth rate of -6.8% and 19.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the last 30 days. 

Howmet Aerospace Inc.

Howmet Aerospace is benefiting from solid momentum in the commercial aerospace market, driven by robust build rates and wide-body aircraft recovery. HWM is also witnessing strength in its defense aerospace business on the back of rising U.S. & international defense budgets. 

Robust orders for engine spares for the F-35 program, spares and new builds for legacy fighters augur well for HWM. Given the strength in most of its served markets, HWM has built a sound liquidity position that supports its shareholder-friendly policies.

Howmet Aerospace has an expected revenue and earnings growth rate of 8.5% and 28.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last seven days. 

Leidos Holdings Inc.

Leidos Holdings ended the first quarter of 2025 on a solid note, with both its earnings and revenues having surpassed their respective Zacks Consensus Estimates. LDOS’ defense solutions continue to witness increased contract wins from the Pentagon and other U.S. allies. These contract wins enhanced LDOS’ bookings, which, in turn, led to a solid backlog of $46.30 billion at the end of first-quarter 2025. 

The Trump administration’s defense budget proposal includes significant investment for the development and deployment of a Golden Dome for America, a next-generation missile defense shield that would protect the United States from missile threats coming from any adversary.

LDOS believes that it is very well-positioned to contribute meaningfully to the Golden Dome mission, which will require next-generation sensor and missile defense capabilities, with its latest air and missile defense capability playing a vital role in the defense of Guam.

Leidos Holdings has an expected revenue and earnings growth rate of 2.7% and 4.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the last 30 days. 

Huntington Ingalls Industries Inc.

Huntington Ingalls Industries is a designer of nuclear-powered aircraft carriers and one of the two primary U.S. shipbuilders. HII has more than 100 years of experience in building ships, aircraft carriers and submarines. Thanks to the strong demand that Huntington Ingalls’ products enjoy, its order value and hence the backlog count remain solid.

Looking ahead, HII expects to launch DDG 129 Jeremiah Denton and complete sea trials for DDG 1000 in 2025. HII also aims to deliver DDG 128 Ted Stevens and LHA 8 Bougainville in 2026 and lay the keel for CVN 81 Doris Miller. 

As far as its submarine contracts are concerned, Huntington Ingalls christened SSN 800 Arkansas in the fourth quarter. HII plans to deliver SSN 798 and float off SSN 800, Arkansas, in 2025. Such a solid pipeline of products bolsters HII’s revenue-generation prospects.

Huntington Ingalls Industries has an expected revenue and earnings growth rate of 3.3% and 2.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the last 30 days. 

Vertical Aerospace Ltd.

Vertical Aerospace is an aerospace and technology company that is engaged in designing, manufacturing, and selling zero-operating-emission electric vertical takeoff and landing (eVTOL) aircraft for use in the advanced air mobility market in the United Kingdom. EVTL is involved in developing its flagship VX4, an eVTOL aircraft. EVTL is pioneering zero-emission aviation.

Vertical Aerospace has an expected revenue and earnings growth rate of 1% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.

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This article originally published on Zacks Investment Research (zacks.com).

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