We recently published a list of the 10 Best Performing Defense Stocks So Far in 2025. In this article, we are going to take a look at where Howmet Aerospace Inc. (NYSE:HWM) stands against other best performing stocks this year.
The world has been rocked with deadly conflicts over the last few years, with Ukraine and the Middle East up in flames. While the human impact of these wars has been tragic, the defense industry has profited by luring investors into piling up their stocks, with several of the world’s top contractors seeing their shares book all-time highs in 2024.
However, American defense stocks have been shaky this year amid mixed statements from the Trump administration on future military spending. Shares fell sharply in February after the US President mentioned he could significantly cut defense expenditure in the future. He made these comments in the context of a potential future conference with China and Russia to discuss cutting military expenditure to spend the money in other areas:
“At some point, when things settle down, I’m going to meet with China and I’m going to meet with Russia, in particular those two, and I’m going to say there’s no reason for us to be spending almost $1 trillion on the military and I’m going to say we can spend this on other things.”
The creation of DOGE has also reshaped investors’ views of the industry. On March 3, the Pentagon, working with DOGE, found some $80 million in what it deemed wasteful funding, which included funds devoted to diversity, equity and inclusion programs, and climate change research.
Despite the downturn, Citi analyst Jason Gursky believes this is the right time to invest in American defense stocks. In a note to clients on March 5, he argued that as long as the global threat environment remains and the United States maintains its leadership role, regardless of whether it is as a sole superpower or as a power in a multi-polar world order, defense spending is expected to remain robust, which would benefit stocks in the sector.
Two recent developments have reinvigorated investor interest in defense stocks. On March 21, Trump unveiled a new next-generation fighter jet, the F-47, to replace the F-22 Raptor. The jet will be for air superiority and have stealth and penetration capabilities that exceed those of the current fleet. The initial contract to proceed with the production is expected to cost approximately $20 billion.
The move adds to the positive momentum after President Trump’s announcement earlier in the month to resurrect America’s military and commercial shipbuilding industry, which he sees as vital to national security, given the strategic competition with China.
Is Howmet Aerospace Inc. (HWM) Among the Best Performing Defense Stocks So Far in 2025?
Engineers examining stress tests of an aircraft engine, working to make sure its ready for flight.
Our Methodology
For this article, we went through screeners to identify stocks in the aerospace and defense industry. From there, we picked the top 10 stocks with the highest year-to-date percentage gains in share price, as of the close of business on March 25, 2025. Pure-play aerospace stocks that do not deal in defense contracts have been excluded from the list.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Howmet Aerospace Inc. (NYSE:HWM) manufactures components for aircraft engines, fasteners, aluminum wheels for trucks, and titanium structures for aerospace and defense applications. It is one of the best performing stocks so far in 2025, with year-to-date gains of 25.92%.
On February 13, the company reported stellar results for the fourth quarter and full year 2024. Q4 revenue increased 9.1% year-over-year to reach $1.9 billion, whereas net income grew 33% from last year to $314 million, driven by robust growth in the commercial aerospace business.
Full-year revenue stood at $7.4 billion, up 12% from last year. Howmet Aerospace Inc. (NYSE:HWM)’s net income surged 57% to $1.2 billion. The operating income margin stood at 22%. GAAP EPS for the year was logged at $2.81, compared to $1.83 per share in the prior year.
The company anticipates another strong year ahead, amid rising OEM production rates, continued demand for commercial aviation and engine spare parts, and growth in the defense aerospace aftermarkets. Following the earnings call, several notable analysts raised their price targets for Howmet Aerospace Inc. (NYSE:HWM), attracting investor interest.
Hardman Johnston Global Equity Strategy stated the following regarding Howmet Aerospace Inc. (NYSE:HWM) in its Q4 2024 investor letter:
“From a sector standpoint, the main drivers of the portfolio’s outperformance during the fourth quarter were Industrials and Materials. Within Industrials, Howmet Aerospace Inc. (NYSE:HWM) and Vertiv Holdings Co. were the largest contributors to outperformance. Howmet reported an earnings beat during the quarter with broad-based strength spanning across all key segments. In particular, the company’s Engine Products and Fasteners segment performed well. During the earnings call, management spent significant time describing the emerging new growth driver of industrial gas turbines, which are used in gas power plants, which have become a focus for investors due to accelerating demand from AI data centers. Howmet is the leading supplier to the three major producers of these engines and will benefit from both initial purposes and the long-term maintenance demand.”
Wall Street analysts are bullish on Howmet Aerospace Inc. (NYSE:HWM) with a consensus Buy rating. According to Insider Monkey’s database for Q4 2024, 58 hedge funds held a stake in the company, up from 45 at the end of the third quarter.
Overall, HWM ranks 8th among the best performing defense stocks so far in 2025. While we acknowledge the potential of defense companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HWM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
