Amid increasing geopolitical uncertainty, the defense sector is garnering attention from finance professionals, particularly as 2026 approaches. The aerospace and defense industry experienced significant gains in 2025, driven by escalating global tensions and heightened government defense spending. Scott Helfstein, Senior Vice President of Investment Strategy at Global X ETFs, believes there is still considerable growth potential in this sector in the coming year.
Helfstein emphasized the shifting landscape of global security, citing the latest national security strategy from the current administration. He noted a movement toward “decentralized deterrence” amid rising policy uncertainty. This backdrop sets the stage for potential investment opportunities within defense stocks.
Here are Helfstein’s top five picks for defense stocks poised for growth in 2026:
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Huntington Ingalls Industries (HII)
With an impressive return of 85% in 2025, Helfstein identified this shipbuilder as a key player in the sector. The company has a longstanding history of supplying naval vessels for the U.S. Navy, and Helfstein anticipates that it will benefit from upcoming technological advancements in autonomous maritime operations. He believes that developments in naval technology will mirror innovations that have been seen in air capabilities over the past two decades. -
BAE Systems (BAESY)
Helfstein is optimistic about BAE Systems, a leading UK-based defense and IT security firm known for its substantial revenues in the European defense sector. He points to the geopolitical shift that may compel the UK to reduce its military dependence on the U.S., presenting BAE Systems as a solid investment option based on its strong fundamentals, which include a reasonable price-to-earnings ratio and significant profit margins. -
Rheinmetall (RNMBY)
This German automotive and arms technology manufacturer has garnered praise from Helfstein for its ability to adapt to a more independent European military approach. After a remarkable return of 190% in 2025, Rheinmetall is positioned to thrive as European nations seek to redefine their defense strategies in light of changing alliances and military dynamics. -
Lockheed Martin (LMT)
Despite facing volatility in 2025, Helfstein still regards Lockheed Martin as one of the most attractively priced stocks in the defense realm. Highlighting the expected growth in the U.S. defense budget, he emphasizes the company’s long-standing role as a cornerstone of the U.S. defense establishment, suggesting it remains a reliable investment. -
BWX Technologies (BWXT)
With a return of 57% last year, BWX Technologies operates at the intersection of defense and nuclear energy. Helfstein considers it an appealing option due to the company’s engagement in both military nuclear engineering and civilian nuclear supplies. He notes that, for the U.S. military, nuclear capabilities have been fundamental for decades, and the rising demand in the civilian sector further enhances BWX’s investment profile.
As geopolitical factors and national security needs continue to evolve, these defense stock selections might present lucrative opportunities for investors looking towards the future. The convergence of military strategy and technological innovation is likely to play a crucial role in shaping the market landscape in the upcoming year.
