Donald Trump’s Three Favorite Defense Stocks

Anyone who’s been following the news lately knows that defense stocks are the place to be right now.

Between Venezuela, Iran, and Greenland President Trump is poised to embark on a campaign of imperial conquest not seen since the 19th century.

And he’s demanded a $1.5 trillion defense budget to help carry it out.

But that’s not all.

Last week, the Trump administration cast favor on a select few defense contractors with backroom deals.

For example, the Defense Department announced it would invest $1 billion in L3Harris Technologies’ (NYSE: LHX)  missile solutions business.

That business will then be spun off into a new company, with L3Harris as the majority stakeholder.

The initial public offering is slated for the second half of 2026, and spoiler alert, we’ll be buying into it.

Regardless, the Trump administration said last year that it’d consider taking stakes in defense contractors after buying into metals companies MP Materials and Lithium Americas last year.

Certainly, such ownership agreements could (rightly) be perceived as a conflict of interest. But it’s a win for L3Harris, which can use the government’s capital to finance its expansion.

“We’re taking action to build today’s ‘Arsenal of Freedom’ by launching a pure-play missile solutions provider,” said L3Harris CEO Christopher Kubasik.

Similarly, the Pentagon struck a deal with Lockheed Martin to drastically increase Patriot missile production.

Lockheed has already increased its Patriot missile production by 60% over the past two years, delivering a record-high 620 in 2025.

However, wars in Ukraine and the Middle East have drastically reduced U.S. stockpiles of this vital munition. Shockingly, the U.S. military has just 25% of the Patriot missiles it needs.

So, in September, the DOD awarded Lockheed $10 billion to produce 2,000 missiles by FY2026. And while the company says it’s on track to meet that goal, it also said it’d require significant capital investment and assurances from the Pentagon that missile orders won’t be delayed or canceled.

The DOD has apparently agreed to those assurances, and promised to reimburse Lockheed for its capital investments if future administrations modify the current administration’s missile deals.

That’s paved the way for the company to build out its operations.

And finally, Huntington Ingalls Industries (NYSE: HII) is benefiting from Trump’s desire for a new “Golden Fleet” of warships.

Trump himself introduced a new “Trump-class” battleship at the end of December, saying they’d be “the fastest, the biggest, and by far, 100 times more powerful than any battleship ever built.”

And Defense Secretary Pete Hegseth visited HII’s Newport News shipyard to deliver a speech on the matter.

“We will give longer, larger, more predictable contracts to companies that deliver on time and on budget, companies that invest in their people, that invest in more capability and more capacity,” Hegseth said.

This bodes well for HII, which has poured half of its free cash flow into capital improvements to increase staff, capacity, and efficiency over the past decade.

All three of these deals have resulted in strong gains for the companies involved.

L3Harris is up 17% to start the year.

Lockheed Martin has jumped 18%.

And HII is up 22%.

Coincidentally, I recommended HII to my Crow’s Nest subscribers back in November and we’re currently sitting on a 30% gain in just over two months.

And LHX has been a fixture in my Secret Stock Files portfolio since 2023. It’s up 80% there.

I keep tabs on the defense sector in both those publications, but Secret Stock Files is exclusively focused on defense tech. And that’s why half our holdings are up triple digits.

If you want to get my latest report — on a stock that’s already up 60% since I recommended it last year — you can find it here.