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This Week's Bonus News
Defense Budget Expansion: 3 Mid-Cap Names in a Sweet SpotSubmitted by Chris Markoch. Posted: 4/20/2026. 
Key Points
- A proposed surge in defense spending is accelerating demand for next-generation military technologies.
- Mid-cap defense companies offer growth potential as they gain contracts and visibility.
- Autonomous systems, cybersecurity, and shipbuilding are key themes driving long-term upside.
- Special Report: Elon Musk: This Could Turn $100 into $100,000
In early April, the Trump administration proposed increasing defense spending to $1.5 trillion for 2027. This was the largest such request in decades and would mark a 44% boost for the Pentagon. At first glance, it would be easy to link the request to the Iran war. However, the administration had signaled its desire for a larger defense budget before that conflict began. The reason is both practical and strategic: the current military infrastructure is not optimally configured for the character of future warfare. Updating it will require greater investment in next-generation shipbuilding and in autonomous defense solutions.
The Wall Street Journal is already raising the alarm about a potential market crash, and Weiss Ratings research points to the first half of 2026 as a particularly rough stretch for certain holdings.
Some of America's most popular stocks could take serious damage as a radical market shift plays out. Analysts at Weiss Ratings have identified five names you may want to remove from your portfolio before this unfolds.
If any of these are in your portfolio, now is the time to review your positions. See the 5 stocks to avoid
This is a principal reason why defense and aerospace stocks have led the market higher in 2026, including big names like Lockheed Martin (NYSE: LMT) and Northrop Grumman (NYSE: NOC). There’s also a growing opportunity in mid-cap stocks with less visibility than their major-index counterparts, which are still being repriced. Kratos Defense: A Pure Play on Autonomous Warfare Growth The pursuit of unmanned autonomous technology in the defense sector will require both offensive and defensive solutions. Kratos Defense & Security Solutions (NASDAQ: KTOS) covers both areas. On the defensive side, Kratos is one of the largest producers of counter-unmanned aerial systems (C-UAS). That market is projected to grow from roughly $6.64 billion in 2025 to about $20.31 billion by 2030, representing a compound annual growth rate near 25%. In March and April 2026, the company announced contracts totaling more than one-third of its fiscal 2025 (FY2025) revenue of $1.35 billion. On the offensive front, Kratos’ XQ-58 Valkyrie has been adopted by the U.S. Marine Corps, which continues to procure additional Valkyries and could move Kratos closer to becoming a program of record for the Department of Defense. KTOS is down roughly 40% from its year-to-date high, with institutional selling outpacing buying. Still, analysts are projecting earnings growth around 38% and continue to raise price targets. That makes the current pullback an attractive entry point for investors in a stock that is still up more than 100% over the past 12 months. Leidos: Software and Cybersecurity Powering Modern DefenseLeidos (NYSE: LDOS) represents the software side of the new-age defense industry. The company focuses on modernizing U.S. government IT systems, cybersecurity, engineering, and professional services, with a broad portfolio in IT, analytics, and mission-critical systems. In 2025, Leidos was awarded a multi-year contract with the U.S. Transportation Security Administration. Investors felt the short-term impact of that award in the company’s Q4 2025 earnings report, where revenue missed expectations in part because of a six-week government shutdown that year. Looking ahead, management has pointed to the Golden Dome project as a potential catalyst in 2026 and beyond. The company also plans to roughly triple capital expenditures to $350 million, which appears aimed at expanding production capacity and upgrading classified facilities. That investment comes while LDOS is down about 20% from its YTD high amid concerns that advances in artificial intelligence (AI) could reshape cybersecurity demand. Analysts have trimmed price targets, but the consensus price target for LDOS is $208.27—more than 30% above the stock’s mid-April price. Huntington Ingalls: Shipbuilding Strength Meets Next-Gen TechHuntington Ingalls (NYSE: HII) blends traditional shipbuilding expertise with newer technologies. The company is best known for building ships, a capability that dovetails with the America’s Maritime Action Plan (MAP)—a sweeping blueprint to update and expand U.S. shipbuilding capacity. Even before MAP, Huntington Ingalls forecasted up to $50 billion in new government contracts over the next 24 months. For context, the company generated just over $12 billion in revenue in 2025. Huntington Ingalls is also building a Mission Technologies segment that includes AI, cyber defense, and unmanned systems. That segment represented about a quarter of the company’s revenue in 2025 and is expected to grow in coming years. HII is the momentum pick in this group. The stock is up about 15% in 2026 and is trading slightly above its consensus price target of $383.22. Analysts are raising price targets ahead of the company’s May 7 earnings report, suggesting there may be additional upside as institutional interest continues to build (institutional ownership). |
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