The U.S. is bringing defense manufacturing back home after decades of outsourcing.
Around $1 trillion will be allocated to our nation’s military in 2026 - much of it to bolster our defense capabilities.
That means new infrastructure will need to be built, but our military doesn’t build all of this alone.
It hires contractors like Lockheed Martin and RTX to build defense and weapon systems for it.
But our military is diversifying where it sends funds - and in 2026, several other companies could benefit from this increased defense spending.
Let's compare three companies positioned to potentially benefit from this market shift and see how they stack up.
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The Three Contenders in Defense Stocks
BWX Technologies (BWXT) - The Submarine Specialist
What they do: Make nuclear reactor components for submarines.
Main product: Reactor parts, heat exchangers, pressure vessels.
Key advantage: Only company in America making these parts.
By the numbers:
- Contract size: $2.6 billion (July 2025, signed with the Navy)
- Backlog: 8 years (through 2033)
- 2024 Revenue: $2.7 billion
- Stock performance: Up 85% YTD (as of Oct 20, 2025), up 260% since 2021.
BWX has a monopoly on nuclear submarine components.
The Navy calls their products "mission critical" because submarines literally cannot function without them.
U.S. facilities and bringing more supply chain work in-house, which could lead to increased revenue for BWX.
Mercury Systems (MRCY) - The Electronics Brain
What they do: Build computing systems for military equipment.
Main product: Signal processors, rugged computers, electronics for weapons systems.
Key advantage: Powers systems for major defense contractors.
By the numbers:
- Customer base: 90% Department of Defense or DoD suppliers.
- Backlog: $1.3 billion.
- Stock performance: Up 126% over 1 year (as of Oct 20, 2025).
Mercury makes the brains that go inside weapons made by companies like RTX and Lockheed Martin.
Their hardware powers missile defense, radar, drones, and communication networks.
They beat Q3 2025 Wall Street expectations and raised full-year guidance - and may benefit as the U.S. military increases defense spending here at home, instead of abroad.
HEICO Corporation (HEI) - The Military Repairman
What they do: Repair and maintain military equipment.
Main product: Approved replacement parts, rapid repair services.
Key advantage: Can do repairs in combat zones.
Equipment serviced: F-35s, F-18s, submarines, destroyers, and more.
By the numbers:
- 2024 Revenue: $3.8 billion (up from $2.9 billion in 2023).
- Stock performance: Up 35% YTD, up 180% over 5 years (as of Oct 20, 2025).
HEICO specializes in sustainment work that the military legally must fund.
Their repairs keep weapons operational, and they're certified by the DoD with decades of expertise.
And if there’s one thing that’s guaranteed - weapons and defense systems will break over time.
This means that as critical defense systems need fixing, HEICO is in a position to potentially profit.
Head-to-Head Comparison Of Defense Stocks
| Factor | BWX (BWXT) | Mercury (MRCY) | HEICO (HEI) |
| Focus Area | Nuclear submarines | Electronics/computing | Repairs & maintenance |
| Revenue 2024 | $2.7B | $835M | $3.8B |
| Backlog | 8 years | $1.3B | N/A |
| YTD Performance | +85% | +126% (1-year) | +35% |
| Key Risk | Navy funding delays | Customer concentration | Budget pressure on contractors |
| Competitive Position | Monopoly (only U.S. maker) | Tier-2 supplier to primes | Critical infrastructure status |
Who Wins in Different Scenarios?
If submarine funding increases: BWX could win. They're the only option for these parts.
If modern warfare demands more electronics: Mercury could win. C4ISR systems (command, control, communications, intelligence) are growing, and Mercury powers these systems.
If conflicts increase globally: HEICO could win. More fighting means more equipment breaks and needs repairs.
The Bottom Line: Defense Stocks
All three companies may benefit as the U.S. military brings critical defense work back home.
But they serve different roles:
- BWX = Critical submarine parts (high monopoly, medium risk).
- Mercury = High-tech electronics (medium specialization, customer risk).
- HEICO = Essential repairs (stable funding, lower growth ceiling).
The best choice depends on your risk tolerance and which part of the defense budget you think will grow fastest.
Our market analysts did a deep-dive into this shift months ago - showcasing even more potential ways investors can profit from this growing opportunity in Market Briefs Pro.
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