Kairos
Stock Research
The Korean defence ETF looks very attractive at $42, about 22x forward earnings, as rising defence spending, especially in the EU, favors Korean firms. Korean defence is mostly ITAR-free, cheaper and faster, and its suppliers are the only ones with idle capacity as nations seek less reliance on the US. Big catalysts include Canada's submarine award in H2 2026, Hyundai Rotem tank deals, Norway's $922M Chunmoo, Finland's €547M K9s and Poland's framework for up to 1,000 K2 tanks. 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
Hyundai Rotem looks interesting as defense demand stays strong and valuations have become more reasonable. Defense order backlogs extend into 2030, and the 'end' of the Iran conflict has resumed contract discussions in the Middle East. Hyundai Rotem makes tanks, and Nippon Avionics, an information-systems maker, also looks interesting in Asia. x.com
Defense, drone and space stocks such as AST SpaceMobile, Rocket Lab, Planet Labs, Kratos and AeroVironment are set to receive non-cyclical, perpetual capex while many sit 60%-70% below their highs. Spending is rising in the US and across the rest of the world, flowing to names that are not crowded or recently up 1,000%. The sector has reset and been left for dead, making it a target basket for next year, including Ondas, LightPath, nLight, Karman and Inflection Point. x.com x.com
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
Missile replenishment looks like the best risk-reward macro thesis, favoring Lockheed Martin and RTX. The missile replenishment program is currently forecast to run through 2031. x.com
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
Czechoslovak Group looks cheap as the lowest-valued name in its EU defense peer group, at a single-digit forward P/E and under 10x forward EBIT. It is a broken IPO that crashed to lows after a short report and sells old-school defense tech, largely repurposed Cold War equipment, but its founder-CEO is a real hustler and parts of the sector have begun trading better. EU defense still faces fiscally constrained governments, crowded positioning and a possible Ukraine peace. x.com x.com x.com
Lockheed Martin is a defensive core holding with near-monopoly defense franchises and steady cash flow. The F-35, over 25% of revenue, is the only fifth-generation fighter deployed at scale in the West, and FY2026-27 budgets raise F-35 funding 62% and more than double PAC-3 and THAAD procurement. Backlog is $186.4B, 2.4x annual revenue, new Army and Navy contracts landed May 28, and over 60% of free cash flow goes to dividends and buybacks. x.com
European defense tech clearly leads US peers in battlefield impact, getting real-world combat validation years ahead of most legacy US primes' roadmaps. US allocators still treat Europe's sovereignty buildout as a sentiment trade rather than the multi-year EU procurement policy it actually is. This answers @LarsenJensenUSA asking whether European defense tech has had a greater battlefield impact than American firms. x.com
EQ Resources looks like a no-brainer because the tungsten rally is not yet reflected in its earnings and it is less known than Almonty. China has stopped exporting tungsten and become a net importer amid surging defense demand and the AI buildout; per @KawzInvests, tungsten rose from $320 to $3,000/mtu in 18 months. Almonty's upside needs excellent execution, while EQR could multiply simply by being discovered. x.com x.com
