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Defence stocks are no longer just a safe haven. They’re now the hottest growth story on the planet, fuelled by a once-in-a-generation surge in global military spending that governments have already committed to for decades to come.

That opens the door to potentially game-changing returns. And it’s why we’ve just recommended the one UK stock that we believe is best placed to profit from this global rearmament wave.

So, what makes this latest Share Advisor stock pick so exciting?

1. The business is deeply embedded at the heart of NATO, with equipment systems used by more than 25 European nations and a US partnership on some of the most critical defence programmes worldwide.
2. It has just secured a record-breaking order backlog of over £80bn that stretches out into the late 2030s, which the market is still undervaluing.
3. It has generated more than £7bn in free cash flow over the last three years. This isn’t a speculative bet on defence. It’s a battle-tested, cash-generating machine that’s already delivered 22 consecutive years of dividend increases.

As our Senior Investment Analyst, Mark Stones, puts it:

“The market isn’t fully appreciating the value of its multi-decade programmes such as frigates and submarines, which don’t come into production until the mid-2030s and beyond.”

Mark Stones, Share Advisor

Of course, there is risk.

A future shift in government defence budgets, geopolitical developments that restrict arms sales to certain customers, or broader market volatility could all weigh on the share price in the short term.

This is very much a long-term holding, and investors should be comfortable with some near-term noise in exchange for what we believe is a compelling multi-decade growth story. 

Of course, investing in defence isn’t for everyone, and we respect that.

For some, the moral weight of the industry will always outweigh the financial case – a legitimate concern. But for those who believe that strong, well-funded democracies are ultimately a force for stability and peace in the world, this company’s mission sits on the right side of that argument.