Best Defense Industry Stocks
Written by
Varun Ratra
These 3 defense stocks are advancing from rising global security spending, growing order books, contract wins and expanding capabilities.
Best Defense Industry Stocks
Electro Optic Systems Holdings Limited (ASX: EOS)
DroneShield Limited (ASX: DRO)
Codan Limited (ASX: CDA)
Electro Optic Systems Holdings Limited (ASX: EOS)
on 20 May 2026, completed a A$150 million placement and announced a A$40 million strategic placement. Together with the proposed share purchase plan and previously announced loan facility, the funds will be used for the MARSS acquisition and to strengthen financial flexibility for future growth. After completion, the company expects a pro-forma net cash position of about A$235 million.
At the 19 May 2026 AGM, EOS showed an order book of A$726 million including about A$217 million from MARSS contracts. Around 60–80% of this is expected to convert into revenue during 2026 and 2027. MARSS also secured new orders worth £85 million from an existing Middle East customer.
EOS highlighted progress in advanced defence technologies. In 2025, it signed a €71.4M contract with the Netherlands for a 100kW high energy laser weapon system. The project is forward of schedule and is expected to be profitable and cash flow positive. The company is also developing its ATLAS space control products with initial commercialisation planned from 2026.
In the quarter ended 31 March 2026, manufacturing and deliveries continued across Australia, the United States, Europe, the Middle East and Asia. A new Singapore facility was formally opened in February 2026, supporting laser weapon production as well as remote weapon system servicing and support.
DroneShield Limited (ASX: DRO)
on 2 June 2026, announced a agreement value up to $24.9 million with the US Joint Interagency Task Force 401. The contract includes a primary $19.3M value and an additional $5.6 million in options over five years. It covers mobile and fixed site counter drone systems, software subscriptions, warranties and services with deliveries scheduled during 2026 and 2027.
The initial contract value is expected to contribute at least $10 million to FY2026 committed revenue with the remainder recognised in FY2027. The agreement also includes integration of compatible third party solutions.
The demand for counter drone technology remains strong across military, government and critical infrastructure sectors. FY2026 committed revenue reached $161 million, increased 61% from the previous corresponding period whereas committed revenue beyond FY2026 stood at $23.5 million.
Codan Limited (ASX: CDA)
on 22 May 2026, announced the acquisition of Adaptive Dynamics' intellectual property through its DTC business. Adaptive Dynamics develops anti-jamming and interference technologies used in defence communications and navigation systems. The deal is expected to strengthen DTC’s capabilities in unmanned systems and future defence programs.
On 29 April 2026, Codan said trading in FY26 was running ahead of expectations. Strong demand for software-defined radios is helping the Communications division achieve revenue growth at the top end of its target range.
The company now expects FY26 EBIT of about $235 million and NPAT of about $170 million, both more than 60% higher than FY25. Minelab sales in the second half are also performing better than the first half.
(Source: Company Report)
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