Defence is emerging as a strong new investment theme, so which ASX shares fit this category?
You'll find some defence companies in the industrials market sector. The first three ASX shares listed below are examples.
You will also find some in the ASX materials sector.
If you prefer investing via exchange-traded funds (ETFs) instead of individual ASX shares, there are thematic defence ASX ETFs.
At the recent ASX Investor Day in Sydney, many analysts raised defence, describing it as an investment trend that could not be ignored.
The US has been encouraging other governments around the world to raise their defence spending.
Just this week, the North Atlantic Treaty Organization (NATO) committed to a massive boost in defence investment over the next 10 years.
NATO Secretary-General Mark Rutte said the 32 member nations had to act urgently to keep up with Russia's and China's military buildup.
In a speech this month, Rutte said Russia could be ready to use military force against NATO by 2030.
By then, China aims to have 435 navy ships and more than 1,000 operational nuclear warheads ready to go.
5 ASX defence shares that are soaring
Electro Optic Systems Holdings Ltd (ASX: EOS)
Electro Optic Systems specialises in advanced weapon systems, counter-drone solutions, and space domain awareness.
The Electro Optic Systems share price is up 3.02% to $2.73 on Friday and up 73% over the past 12 months.
As my colleague James reports, Bell Potter rates this ASX defence share a buy and has bumped up its 12-month price target to $3.10.
There was no price-sensitive news from Electro Optic Systems this week.
Austal Ltd (ASX: ASB)
Austal is a defence shipbuilder and services provider that builds ships for the Australian Navy and US Navy.
The company commenced operations in Perth in 1988 and was listed on the ASX in 1998.
The Austal share price is up 2.15% to $6.19 on Friday and up 151% over the past 12 months.
This week, Austal completed the funding arrangements for its $1.2 billion capital expansion program in the US.
The shipbuilder secured $488 million in credit facilities from a group of Tier 1 financial institutions, including Australian and international banks and Export Finance Australia.
Droneshield Ltd (ASX: DRO)
Droneshield makes drone defence systems.
This ASX defence share has been in the news this week after Dronesheld announced a $61.6 million European military contract.
Droneshield also released a new investor presentation.
The Droneshield share price is down 4.18% to $2.29 today and up 40% over the past year.
Bell Potter has a buy rating on this ASX defence share and lifted its 12-month price target this week from $1.50 to $2.60.
Titomic Ltd (ASX: TTT)
Titomic offers industrial-scale metal additive manufacturing solutions using its patented kinetic fusion cold spray technology.
The cold spray is used in the development and production of products for many industries, including aerospace, defence, and shipbuilding.
This week, Titomic announced that retired Lieutenant General John Frewen, AO, DSC, would join the board from 1 July.
Titomic executive chair, Dag W.R. Stromme, said:
Drawing on his vast experience, John will play an important role in bringing Titomic Kinetic Fusion™ value added capabilities to the Australian, U.S. and European manufacturing base helping defense and industry Build Smarter, Sustain Longer and Move Faster.
The Titomic share price is up 1.79% to 28 cents today. This ASX defence share has risen 307% over the past year.
VanEck Global Defence ETF (ASX: DFND)
The VanEck Global Defence ETF provides exposure to a portfolio of global companies involved in the military or defence industries.
This ASX ETF has just rebalanced its portfolio, adding three more defence shares to now hold 32 stocks.
The DFND ETF is up 2.12% to $35.09 today and up 75% since its inception last September.
There are no ASX shares among DFND's stocks, so the ETF is a complementary investment to any ASX defence shares you may hold.
About 52% of holdings are US shares, 11% are in France, 8% in Italy, 8% in South Korea, and 6% in Sweden.
The DFND ETF's top five holdings are AI and defence software firm Palantir Technologies Inc (NASDAQ: PLTR) 8.1%, French defence electronics specialist Thales SA (FRA: CSF) 7.8%, Italian aerospace and defence group Leonardo SpA (FRA: FMNB) 7.8%, US missile and aerospace giant RTX Corp (NYSE: RTX) 7.7%, and Swedish aerospace and defence company Saab AB (STO: SAAB-B) 6.4%.
