We live in interesting times, made more interesting by US policy statements delivered by Vice President JD Vance at the Munich Security Conference last week.
These were not unexpected, but confirm that Europe will increasingly need to look to its own security. It effectively re-draws the transatlantic relationship which has underwritten European security since the formation of NATO.
Big questions will also remain over the future of NATO itself and relations with Russia. European governments, including the UK, will need to start spending more money on defence than they have since the Cold War. It is also likely that European aerospace and defence companies will see the lion's share of this money, as the Trump administration's current stance is likely to shut US defence firms out of many European contracts.
In this article we have crunched the numbers with the aid of our Data+ service to get some perspective on the highest quality listed European defence and aerospace stocks. Here are the top five beneficiaries of Trump's New World Order.
Babcock International [LON:BAB]
Shares in Babcock have been on a run since Trump got into the White House. Babcock is a slam dunk bet off a more European-focused defence strategy. The London shares launched from a recent low of £4.86 in mid-January and are currently trading at £6.16. Already an Armchair Trader stock tip for our subscribers since December 2022 (we got in at £2.91), Babcock is a surefire winner in the current global security scenario, with divisions active in marine, nuclear, land and aviation categories. It builds warships including aircraft carriers, as well as specialised equipment like air defence systems. Babcock seems well-positioned to benefit from future European defence contracts.
Avioane Craiova [BVB:AVIO]
If you're interested in exotic microcaps, Avioane Craiova could be of interest, with a market cap of less than EUR 25m. The Romanian defence company has seen its stock bid up over 47% in the last six months. We anticipate it should see more demand from local and international investors. Avioane Craiova manufactures advanced trainer aircraft as well as overhauling and repairing other types of military aircraft. It was founded in 1972, back when Romania was in the Warsaw Pact, but these days seems well-positioned to support European defence strategy in eastern Europe.
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