Non-ITAR defense suppliers such as Electro Optic Systems, BAE Systems, Theon and Rheinmetall are an overlooked source of alpha as Europe, Asia and the Middle East shift defense spending away from US ITAR-controlled equipment. That shift comes with huge spending, yet US-based investors misunderstand it and wrongly call defense tech dead. Eurosatory confirmed the view, and the big alpha is not in drone builders. x.com  x.com  x.com 

The best valuation-adjusted European and Asian defense names are probably not the obvious winners such as Saab and Rheinmetall, where much of the easy multiple expansion already happened. In Europe, Leonardo ranks first, then BAE Systems. In Asia, Korea Aerospace Industries and Hanwha Aerospace lead, followed by LIG Nex1 and Hyundai Rotem. Per @eliant_capital, this year's geopolitical developments mean European and Asian defense companies are still likely headed a lot higher. x.com  x.com 

Theon International is a European defense company with excellent management, executing a roll-up strategy with huge tailwinds from European defense spending. Focused on night vision, it just bought a counter-drone company. Fundamentals improved in the latest quarter, yet the stock is down big on broad defense-market bearishness and sits within 10% of its trailing lows. x.com 

European equities offer relatively low cross-region valuations alongside excellent fundamentals across infrastructure, aerospace, space and defense, financials and other industrial segments. This is the most bullish outlook on the region since after Liberation Day last year. Ferrovial, Societe Generale, RWE, OHB, BNP Paribas and Nexans are named as expressions of that view. x.com 

Electro Optic Systems, nLIGHT and LightPath are defense stocks to own as forward multiples may compress with no high-profile conflicts in sight. US and European rearmament is unchanged and earnings should grow solidly for two to three years, but upside may take patience. Well-managed, profitable firms with backlog growth in the fastest-growing niches should hold up better than cash-burning drone makers. EOS's UAE joint venture, laser contract and $124 million RWS contract add optionality. x.com 

Drone stocks fell in 2026 even as backlogs hit records: Ukraine turned aircraft into ammunition, and the Pentagon's 2027 request holds nearly $75B for drones and counter-drone. AeroVironment's reordered loitering munitions and Kratos's jet drones are highest conviction. Counter-drone names Ondas, Axon, Motorola Solutions, Safe Pro, DroneShield and Rheinmetall gain as threats grow, Unusual Machines from Chinese-parts bans. Primes bury drone exposure; pure plays may not convert backlog. x.com  … Show more

Government spending is defense's version of AI hyperscaler capex but more dependable, and the market isn't pricing it in. Global defense is seen at $3T+ for 2027 versus about $1T of hyperscaler capex, and the Pentagon seeks $80B in wartime spending on top of a $1.5T budget. With Lockheed Martin, Northrop Grumman, Kratos, AeroVironment, AEVEX and Kraken Robotics 24-58% off highs, capital could rotate back soon, especially if institutions diversify from AI, rewarding contrarians in 3-6 months. … Show more

Small-cap defense stocks such as Red Cat, AEVEX and Kraken Robotics look like buying opportunities after a sell-the-news drop following the Iran strikes, because the thesis has only gotten stronger. The U.S. lacks enough drones, interceptors, mine-hunting technology and critical metals, and a proposed $1.5 trillion defense budget should bring a wave of fresh contracts as it advances. The Iran war is a major catalyst even though Lockheed, Kratos and Red Cat have fallen 15-19% in a month. x.com 

Defense stocks such as Kratos, AeroVironment, Ondas, Northrop Grumman and L3Harris are trading as if global leaders had turned into pacifist hippies, which is probably not the case. x.com 

Rheinmetall's growth isn't limited to European defense: Kuwait is buying its MASS decoy launchers for the first time, a Middle East order. x.com