4 Stocks to Own as Record Cash Floods Defense Tech

Money is pouring into defense tech at a historic pace, and the numbers stopped me cold. In just the first five months of 2026, startups collected a record 14.6 billion dollars, passing the full-year 2025 record of 9.6 billion before midyear. For comparison, the sector drew 1.6 billion in 2020. I cross-checked this record pace against the news flow compiled from Crunchbase data and noted that five months already beat the whole of 2025 with room to spare.

On the geopolitical front, Israel made a striking move. Its finance and defense ministries chose to back two ventures, Adir Capital and Sling Capital, with state guarantees worth about 33 million dollars each, requiring each fund to raise at least 150 million in private capital on top. The focus is drone technology , autonomous systems, and electronic warfare. I verified the fund details through the official announcement reported by timesofisrael.com and summarized the guarantee-leveraged private capital structure.

Why private money matters for public stocks

The question for public investors is obvious: why care about money going to private firms. The answer hides in concentration, because the largest checks land on closed giants like Anduril. Anduril raised 5 billion dollars in May 2026, led by Thrive Capital and Andreessen Horowitz, doubling its valuation to 61 billion while disclosing that 2025 revenue had doubled to 2.2 billion. I confirmed the financing round through the deal terms reported by TechCrunch and noted the doubling of revenue.

But that is where the story starts, not where it ends. Government-backed startup funding points to far larger contract spending ahead. Every drone and autonomous system must be integrated, tested, powered, and bolted onto existing platforms, and those platforms belong to listed companies. Host Steve Reitmeister builds his thesis right there: private firms collect the funding, public platform owners do the work.

His screening tool is WallStreetZen's quantitative rating system. The model scans every stock across 115 fundamental, technical, and AI factors, compressing the result into an intuitive letter grade from A to F, plus seven component grades such as value, growth, and momentum. The striking fact is that the defense industry as a whole grades as a D. Owning the theme is the wrong call; picking single names is the whole game.

Why the crowd favorite was cut

Start with everyone's favorite: Palantir. The speaker says it earns only a middling C after the full 115-factor review, with literally thousands of stocks outranking it, and treats a C as a goodbye signal. Its value grade sits in the bottom 11 percent of all stocks reviewed. It may be a great company, but the price materially lowers the odds of future share-price success. I framed the price debate with the forward multiple data in the comparative analysis published by Fool and carried over its growth expectations.

Four stocks and the thesis behind each

The first pick is a value investing case: Science Applications International, or SAIC. This is the contractor Washington calls first when military software, networks, and data systems need modernizing. New drones and autonomous systems are useless until they plug into military networks, and that integration work is exactly what the company does day and night. It has beaten earnings estimates for five straight quarters, carries three years of booked business, and trades at a forward P/E of only 11 against an average stock near 19. I compared the video's picture with the revenue and profit figures in the SAIC results bulletin published on the company's own investor relations page.

Next comes the aircraft maker NATO keeps lining up to buy: Embraer. The Brazilian manufacturer sits just behind Boeing and Airbus in commercial jets, and its ticket into this video is the KC-390 military transport that NATO countries are ordering as they rebuild air fleets. Last quarter Wall Street expected about 62 cents a share and the company delivered 1.19 dollars, a near-100 percent earnings surprise . Its PEG ratio of 1.18 sits below the 1.5 average, a growth-at-a-reasonable-price profile. I verified the earnings surprise against the figures in the official 6-K filing submitted to the SEC and noted the gap between expectations and delivery. I also summarized the production ramp plan alongside the executive comments in the briefing coverage published by breakingdefense.com.

The third name is the bluest blue chip: Lockheed Martin. The world's largest defense contractor holds one of the fattest backlogs in the business across F-35 jets, missiles, missile defense, and hypersonics. When fresh venture money floods drones and autonomy, those systems end up bolted onto its platforms. The shares sit 25 percent below summer highs, the kind of pullback long-term investors dream about in this quality of backlog. It closed the quarter with a record backlog above 230 billion dollars and raised full-year guidance. I carried the guidance revision together with the management commentary in the news report by Reuters tying it to Pentagon restocking demand.

The closer is the system's number-one ranked defense stock: Astronics. The maker of aircraft power systems, connectivity, and test equipment spiked toward 90 dollars in July before a 30 percent pullback. The best part is the turnaround: after two years of heavy losses it is back in the black, with four straight healthy earnings beats, the latest at 70 cents a share against a meagre 3 cents a year ago. Another 41 percent profit growth is expected next year, about two and a half times the industry pace. I confirmed the record sales and backlog against the quarterly results in the Astronics investor bulletin and added the raised annual target.

To wrap up, the speaker's message is that pullbacks like those in Lockheed and Astronics do not stick around forever. Anyone interested should research soon whether these names deserve a portfolio slot. Ratings update daily, so checking current scores before any buy, hold, or sell decision is mandatory. My reading agrees: the theme is strong, but the returns live in selectivity, with each of the four names serving a different risk and horizon.