Stock market: defense stocks are soaring, here's how to benefit from it!

Europe is facing an historic turning point in terms of defense. Long dependent on the US security umbrella, European states are realizing the urgent need to strengthen their military capabilities, particularly in the face of growing geopolitical tensions. How can we take advantage of this trend? Here are the answers.

The conflict in Ukraine, the strategic repositioning of the United States and the development of new military technologies are putting the European defense industry in the spotlight. Against this backdrop, the sector's stock market values are soaring and attracting increased investments. This dossier provides an overview of the main players in the market, the financial opportunities it offers, and the investment vehicles available to gain exposure.

The war in Ukraine was a wake-up call for Europe, revealing the shortcomings of its military autonomy and the fragility of its dependence on the United States. Added to this was the strategic vagueness induced by US foreign policy, particularly since the re-election of Donald Trump, who hinted that Washington's support for NATO would no longer be unconditional. The result: an acceleration of European efforts to strengthen their defense industry.

Companies in the sector are seeing their order books explode. By 2025, Rheinmetall forecasts sales growth of 25 to 30%, driven by increased demand for armor and ammunition. Indeed, Thales has signed numerous contracts and should continue to benefit from its key positioning.

Europe is also preparing a budget reform to finance these investments. The European Commission has announced a plan to mobilize 800 billion euros, including 150 billion in dedicated loans to national governments.

The European defense industry is based on an ecosystem of companies covering all segments: aeronautics, armor, cybersecurity, military electronics, drones and naval armaments. These include major players such as BAE Systems, Thales and Rheinmetall. You'll find a list of 16 listed European defense companies in this sector panorama.

Bonus: our latest analyses of Thales and Dassault Aviation.

The outsiders

Behind the headliners, we find a vast ecosystem of more or less strategic subcontractors. Our team has identified 20 smaller, listed companies operating in the military sector in Europe. These include some fine industrial companies, as well as some highly speculative ones.

Want to dig even deeper into the sector? Zonebourse's Defense thematic list offers you a privileged entry point into the Stock Screener, to dive deep into the financial performance of companies in the sector.

For several quarters now, the Europe Defense portfolio has been part of the benchmark portfolio for MarketScreener subscribers. Among the 20 lines are Sweden's Saab, Germany's Rheinmetall and Spain's Indra Sistemas.