These ASX Defence Stocks are on a Tear … Should you Buy them Now?

Key points:

• Rising global defence budgets create momentum for ASX Defence Stocks, like DroneShield (ASX:DRO), Electro Optic Systems (ASX:EOS) and Austal (ASX:ASB),
• Director share sales in DroneShield viewed as profit taking amid strong business fundamentals,
• Metal Powder Works (ASX:MPW) and Elsight (ASX:ELS) identified as emerging beneficiaries of defence sector growth,
• Austal’s status as Australia’s sovereign shipbuilder underpins its long-term market appeal.

What are the Best ASX Defence stocks to invest in right now?

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Defence spending continues to surge globally, setting the stage for these ASX Defence Stocks with advanced technologies to prosper, according to Stuart Roberts from Stocks Down Under. Roberts highlights the renewed momentum for DroneShield (ASX:DRO) and Electro Optic Systems (ASX:EOS), both of which have rebounded from recent sell-offs on the back of significant contract wins.

He notes that despite board and executive share sales triggering a sharp drop in DroneShield’s price, the underlying demand for anti-drone technology remains strong, fuelled by persistent geopolitical tensions and increased military budgets. Roberts sees the recent director selling as a response to tax bills after remarkable gains, minimising concerns about future prospects for the company.

Keep a close eye on ASX-listed Titanium plays

Roberts further points to Metal Powder Works (ASX:MPW), recently listed with a $300 million capitalisation, as a lesser-known company poised to benefit from increased defence budgets. The firm’s innovative use of titanium in additive manufacturing, such as components for fighter jets, positions it favourably in a sector that demands high-performance materials. Another standout is Elsight (ASX:ELS), an Israeli-linked company providing secure communications for military assets in challenging environments, having secured another key contract this week.

Large cap ASX Defence stocks

For Roberts, Austal (ASX:ASB), despite occasional troubles with cost overruns associated with defence contracts, remains a pivotal player as Australia’s sovereign shipbuilder. The company’s long-term trajectory is seen as positive given its entrenched client relationships after achieving critical security clearances, making it appealing for savvy investors during share price dips caused by short-term setbacks.

Watch the whole interview here