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As geopolitical uncertainty rises, many finance pros have homed in on the defense sector
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Scott Helfstein of Global X ETFs thinks a handful of stocks in the sector are poised to soar.
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He shared his top five defense stock picks for the coming year.
In an era of rising geopolitical uncertainty, the defense sector is an area of the stock market that investing pros think is worth a closer look as 2026 approaches.
The aerospace and defense sector already enjoyed a big year in 2025, catapulted higher by geopolitical unrest and rising defense spending by the federal government.
Scott Helfstein, senior vice president of investment strategy at Global X ETFs, thinks the industry has even more room to run in 2026. He spoke to Business Insider about his top defense stock picks for the coming year and why he believes the industry is poised for growth.
“We think that there is significant change going on geopolitically right now,” he said. “We just got the latest national security strategy out of the administration, and by and large, we’re moving to a world of decentralized deterrence and probably increased policy uncertainty.”
Here his top five picks in the sector for the coming year.
Huntington Ingalls Industries
Ticker: HII
2025 return: +85%
Commentary: Helfstein named the shipbuilder as one of his top defense stock picks for 2026. He pointed to Huntington Ingalls‘ history of supplying ships for the US Navy and noted that he believes it will benefit from a shift that’s coming to the industry.
“I think what we’re seeing is now a pivot in technology to realize that we could be doing things autonomously at sea that we’ve been doing in the air for 15-20 years, and that’s going to be a growth area for the next few years as we think about how to scale kind of global influence,” he said.
BAE Systems
Ticker: BAESY
2025 return: +64%
Commentary: Helfstein is bullish on BAE Systems, a UK-based leader in the defense and IT security spaces. It is one of Europe’s largest defense contractors by revenue.
Helfstein thinks it is poised to benefit from a shifting geopolitical climate in which the UK is forced to move away from its reliance on the US as a military ally. He also sees it as logical play based on strong fundamentals.
“I think BAE systems is an interesting option there, it sells for about 19 times on forward earnings, free cash flow yield at 4% so it also has one of the higher profit margins,” he said.
Rheinmetall
Ticker: RNMBY
2025 return: +190%
Commentary: Helfstein also praised Rheinmetall, a German automotive and arms technology manufacturer. Like BAE Systems, he sees it as a likely winner of a shifting military landscape, particularly a more independent Europe less aligned with US military and strategic goals.