Two Defense Stocks to Buy With Limited Capital: Investment Opportunities in Textron and Huntington Ingalls

The global security landscape has fundamentally shifted. With ongoing conflicts reshaping international relations and military spending reaching new heights worldwide, defense stocks to buy have become increasingly attractive for investors seeking stability in an uncertain world. While the sector as a whole has experienced significant valuation expansion, two compelling opportunities still trade at reasonable multiples: Textron and Huntington Ingalls Industries. Both companies represent solid choices for those with $500 to deploy in defense sector equities.

A Changing Geopolitical Environment Reshapes Defense Spending

The post-Cold War dividend has long been exhausted. Today’s world presents a complex security picture: escalating Middle East tensions, regional conflicts in Southeast Asia, military buildups in contested waters, and the ongoing European land war all underscore the sustained demand for advanced defense capabilities. This environment has catalyzed substantial increases in military budgets across developed nations, fundamentally supporting long-term growth in defense contractors.

The challenge for investors is navigating a sector where valuations have expanded considerably. Defense stocks as a category have become expensive, with many trading at multiples that reflect heightened investor enthusiasm for the sector. Yet beneath this premium valuation landscape, selective opportunities remain for patient investors willing to conduct thorough analysis.

Understanding Textron: Diversified Defense and Aviation

Textron may operate below the profile of mega-cap defense contractors, yet its portfolio spans some of the world’s most recognized aviation brands. Through Textron Aviation, the company manufactures Cessna and Beechcraft aircraft for both civilian and military applications. The Bell Helicopter division, Textron’s second-largest revenue contributor, partners with Boeing to produce the V-22 Osprey tiltrotor platform for Marine Corps operations.

Beyond aerospace, Textron Systems serves ground operations by manufacturing the M1117 armored vehicle for Army use, LCAC 1000 hovercraft for naval forces, and the RIPSAW M5 robotic tank platform developed through its Howe & Howe subsidiary. This diversification across multiple defense categories reduces concentration risk while ensuring exposure to varied military programs.

From a valuation perspective, Textron presents an attractive entry point. At approximately $15.8 billion in market capitalization, the stock trades at 19 times trailing earnings—a reasonable multiple for defense sector standards. More compelling is its price-to-sales ratio of approximately 1.1x, placing it among the most attractively valued defense stocks to buy when measured by this metric. While free cash flow multiples appear somewhat elevated at 22.7x, the overall valuation profile suggests limited downside risk.

Analyzing Huntington Ingalls: Naval Shipbuilding and Strategic Position

Huntington Ingalls Industries represents the former military shipbuilding division spun from Northrop Grumman in 2011. Since its independence, the company’s stock has appreciated approximately eight-fold, despite sales growth of merely double—a testament to the value of disciplined capital deployment and strategic positioning within the defense industry.

Today, Huntington Ingalls serves as a primary architect of U.S. Navy capabilities. The company specializes in constructing nuclear-powered aircraft carriers and nuclear submarines while manufacturing amphibious assault ships, destroyers, and Coast Guard cutters. Given the Navy’s ongoing focus on maintaining superiority in the South China Sea against an expanding People’s Liberation Army Navy—currently the world’s largest by vessel count—Huntington can anticipate sustained demand for its capabilities.

Priced at just over $13.2 billion in market capitalization with $12 billion in annual revenues, Huntington Ingalls trades at roughly 1.1x sales—equivalent to Textron’s multiple but historically lower until recent developments. The company’s valuation reflects both its strategic importance and capital intensity, yet remains attractive relative to broader defense sector multiples.

The Catalyst: New Small Surface Combatant Opportunity

Until recently, Huntington Ingalls traded at a discount to Textron on valuation metrics. That changed dramatically following a significant Navy announcement: Huntington has been selected to design and construct a new class of “small surface combatant” frigates to replace the Navy’s Constellation-class program, which had been canceled.

Notably, Huntington’s design leverages the successful architecture developed for Coast Guard National Security Cutters, representing proven technology ready for rapid deployment. This selection triggered an immediate market reaction, with Huntington’s shares surging more than 4% on the announcement.

The scale of this opportunity merits emphasis. The original Constellation program encompassed plans for at least 20 frigates, with potential for three times that number. With only two Constellation-class ships now under construction by Fincantieri, substantial room exists for Navy acceptance of Huntington-designed alternatives. This competitive displacement represents a significant revenue growth catalyst potentially spanning years of fulfillment.

Why Huntington Ingalls Emerges as the Preferred Defense Investment

Both companies represent defensible positions for capital deployment in defense stocks to buy at current valuations. Each trades at multiples suggesting limited downside while offering exposure to secular tailwinds supporting military spending.

Between the two opportunities, however, Huntington Ingalls presents the more compelling near-term narrative. The company combines attractive baseline valuation with a specific, quantifiable catalyst—the small surface combatant program—that could materially drive revenue expansion over the coming years. The competitive displacement of Fincantieri’s program by a Huntington design suggests a substantial addressable opportunity, particularly if the Navy authorizes annual production beyond the initial contracted vessels.

For investors allocating capital to defense stocks to buy with $500 or another modest amount, Huntington Ingalls merits serious consideration as the superior choice between these two options.