The All Ordinaries Index (ASX: XAO) has gained a modest 1.48% over the past year, with one ASX All Ords defence stock doing a lot of the heavy lifting.
The fast-rising company in question is Aussie shipbuilder Austal Ltd (ASX: ASB).
Despite slipping 1.79% at the time of writing to $4.11 per share, the Austal share price is up 88.94% over the past year.
The ASX All Ords defence stock has also smashed the benchmark returns in 2025.
Year to date, the Austal share price is up 32.58%, while the All Ords has lost 3.23%.
And according to Macquarie Group Ltd (ASX: MQG), Austal shares could surge another 16% from current levels in the year ahead.
ASX All Ords defence stock on 'best picks' list
In Macquarie's March small and mid-cap ASX stocks best picks list, analyst Mitch Sonogan gives Austal an outperform rating. The broker has a target price of $4.75 on Austal shares, or 15.57% above today's share price.
Among the reasons Macquarie is bullish on the ASX All Ords defence stock is its "attractive exposure" to the growing defence spend in its key markets of Australia, the United States, and Southeast Asia, as well as the expansion of the US industrial base.
"ASB has secured a significant number of contract wins in the US, which along with potential program extensions, underpin the US business for the next decade," Sonogan said.
Then there's Austal's record order book with long-term contracts.
"ASB's order book was $14.2 billion at the 1H25 result, excluding Australia contracts expected to be awarded under the SSA", Sonogan noted.
When Austal released its first-half results on 21 February, the company also increased its full-year FY 2025 earnings guidance to "not less than" $80 million in earnings before interest and tax (EBIT), up from the prior guidance of approximately $80 million.
On the growth path
Sonogan also said the ASX All Ords defence stock is "tracking well" towards its FY 2027 revenue target of $500 million, with its addressable market growing in both the US and Australia.
According to Sonogan:
Completion of the floating dock in San Diego will enable ASB to work on a broader range of ships, with 72 vessels currently under sustainment contracts.
ASB's successful bid to start manufacturing modules for the US nuclear submarine program provides another lower risk, long-term revenue opportunity with the module facility expected to be completed in 2026.
And following on Austal's recent $200 million capital raise, conducted at a 15.6% discount to the company's share price at the time, Macquarie said this removes funding concerns over the ASX All Ords defence stock's growth projects.
The broker noted:
The recent raise will partly fund the Final Assembly 2 (FA2) infrastructure expansion project in Mobile, Alabama, with a forecast cost of ~US$300 million.
The new FA2 facility includes a new assembly building, waterfront improvements, and a new ship lift system enabling ASB to assemble and service large vessels. The lift system will be the largest on the Gulf Coast and the widest in the US.
Construction of FA2 began in July 2024 and is expected to be operational in FY26 and completed in FY27.
