Defense Stocks With Direct Exposure to Energy Security and Military Readiness

Geopolitics just moved back to the front of the market’s attention, with U.S. strikes on Iran, drone and missile attacks across the Gulf, and oil prices reacting sharply. When tensions spill into shipping lanes and supply chains, some stocks can gain new contracts or attention, while others face higher risks and costs. This article looks at how that mix of risk and opportunity connects to the latest Defense and Aerospace Stocks screener and highlights 3 stocks that appear positively exposed to the current news cycle, so you can decide whether they deserve a closer look in your own research.

Flowserve (FLS)

Overview: Flowserve is an industrial engineer that makes and services pumps, valves, seals and control systems that keep liquids and gases moving safely through critical infrastructure, from oil and gas and power plants to water systems and chemical facilities worldwide.

Operations: Flowserve generates most of its revenue from its Flowserve Pump Division at about US$3.2b and its Flow Control Division at about US$1.5b, with small group eliminations between segments.

Market Cap: US$8.9b

Flowserve puts you close to the plumbing of global energy and defense, supplying pumps, valves and seals that keep refineries, power plants and naval assets running. This may gain attention when conflicts tighten shipping lanes and raise concerns about infrastructure reliability. The company has been working on margin expansion, recurring digital services and nuclear and power exposure that tie into AI data center and energy security themes. It also faces real risks from Middle East disruptions, higher external funding and integration work on its new Trillium valves acquisition. With activist investors engaged and a regular dividend in place, the bigger question for you is how these moving parts line up for Flowserve over the next few years.

Flowserve’s push into higher margin services, nuclear and power makes the full story easy to underestimate, and the real tension sits in how that plays against activist pressure and integration risk in the 5 key rewards and 1 important warning sign

VSE (VSEC)

Overview: VSE Corporation is an aviation services specialist that supplies aftermarket parts and provides maintenance, repair and overhaul for commercial and government aircraft, serving customers ranging from global airlines and cargo operators to MRO shops and private jet owners.

Operations: VSE currently generates about US$1.2b in revenue from its Aviation segment, which is focused on aftermarket parts distribution and MRO services.

Market Cap: US$5.5b

VSE sits at the intersection of rising defense demand and a busier global flight cycle. The recent Middle East escalation and focus on aircraft readiness have put this stock on many investors’ radar. The pure-play pivot into aviation aftermarket parts and MRO, supported by deals such as the US$2b Precision Aviation Group acquisition, has been associated with rapid earnings growth and higher analyst expectations for double digit revenue and profit expansion. At the same time, a high P/E, significant reliance on external borrowing and exposure to legacy engines mean investors may be paying a premium for integration and execution to go as planned. The full story is in how those trade-offs compare with the potential upside analysts see in VSE’s aero aftermarket platform.

VSE’s accelerating aero aftermarket story and premium P/E leave a big question hanging over the stock, and the analyst forecasts for VSE could show whether current expectations fully capture the integration risk that investors are quietly circling.

EnerSys (ENS)

Overview: EnerSys develops and sells industrial batteries and energy storage systems that keep critical equipment running, from data centers and telecom networks to forklifts, trucks and specialized power solutions for military and defense applications.

Operations: EnerSys generates about US$1.7b in revenue from Energy Systems, US$1.4b from Motive Power, US$665.1m from Specialty products and a small amount from Corporate and Other, with around US$2.4b of sales in the United States and US$1.4b from foreign markets.

Market Cap: US$7.1b

EnerSys sits at the crossroads of defense spending, AI data centers and electrified industrial equipment, which makes it an interesting fit for investors following defense and aerospace themes. The Specialty segment ties directly into batteries for military vehicles and advanced defense programs, while recent launches like the DataSafe Noir lithium system aim at AI heavy data centers. At the same time, revenue growth is slower than the broader market and some end markets have seen softer volumes, so the story is not risk free. With earnings forecasts pointing higher and management actively reshaping the portfolio and cost base, the open question is how much of this potential is already reflected in the current share price and analyst targets.

EnerSys looks like an energy storage story that is only half told, with defense and AI heavy data centers in the mix but not fully appreciated. The analyst forecasts for EnerSys could reveal whether the current forecasts are missing a key twist in the company’s trajectory.

The three stocks here are just a starting point, and the full Defense and Aerospace Stocks screener includes 10 more defense and aerospace companies with equally compelling narratives that could fit different risk profiles and time horizons. Use Simply Wall St to identify and analyze the specific catalysts, contract exposure and balance sheet strengths discussed in this article so you can filter down to the highest conviction ideas for your watchlist.

Take Control of Your Investment Journey

If EnerSys or any of these companies sound like a great opportunity, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value the ideal entry point. Once you've made your move, manage your holdings with our Portfolio Command Center that filters out the noise to deliver only the most critical, actionable updates. Throughout your journey, our Community allows you to filter the best ideas from thousands of investor perspectives. By uncovering hidden catalysts and risks early, you'll accelerate your decision-making and stay one step ahead of the market.

Seeking Alternatives Before Everyone Else?

Fresh stock themes can move from quiet buildup to sharp breakout quickly, and the best entries rarely wait around. Scan these under the radar ideas now and consider them before they become widely followed.

• Review early momentum in overlooked miners by running the 33 elite gold producer stocks that focuses on producers with real output and potential leverage if sentiment turns.
• Look for power grid upgrades before they are fully reflected in prices by checking the 33 power grid technology and infrastructure stocks aimed at companies helping keep electricity flowing to data centers and cities.
• Follow the reshaping of manufacturing and logistics by scanning the curated 33 robotics and automation stocks packed with businesses building automation and robotics for potential productivity gains.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com