Whether you’re looking at UK or US stock markets, bonds or even crypto, the past few weeks have seen heightened volatility and prices falling. Some of this relates to investor fear around President Trump’s tariff proposals. There’s also some worry about inflation here in the UK and elsewhere starting to rise again. Yet despite all of this, one FTSE 100 share has been rocketing higher.

Moving higher, not lower

I’m referring to BAE Systems (LSE:BA.). The defence company has seen a 33% jump in the stock price in the past month. Over a broader one-year period, it’s up 25%.

There are a few key reasons for the outperformance against the gloomy backdrop. In recent weeks, European countries have committed to bolstering their military expenditures in response to geopolitical tensions, particularly concerning the situation in Ukraine. This commitment naturally will mean higher spending and new contracts with defence companies in this space. BAE Systems is active in Europe already, so should do well going forward, tragic though the situation is.

Within this period, the business released 2024 results. They were strong, with sales rising by 14% versus the year before. Underlying earnings before interest and tax jumped by 14%. Aside from this, it has a large order backlog of £77.8bn, up £8bn from last year.

This shows that there’s already high demand and that the business has strong momentum. The CEO noted that “based on the exceptional visibility of our record order backlog and sustainability of our value-compounding business model, we remain confident in the positive momentum of our business into the future”.

Direction from here

During periods of market volatility, it’s important to remember to identify the causes. As a result, an investor can identify which stocks to avoid but also find pockets of opportunity. Concerns around security and defence is bad for some sectors, but for BAE Systems, it’s a positive.

Tariff woes will impact the firm, as it does have US operations. But this isn’t to the same extent as some auto or agriculture stocks that are likely severely damaged by potential implementation of tariffs.

Therefore, I think the stock can continue to move higher in coming months. Of course, if another catalyst of concerns arise, it could hit BAE Systems. But based on the reasons for the market fall so far, it’s not likely to be bad for the business.

However, there are risks involved. A big one is the controversial take on investing in defence stocks. Some investors just don’t feel comfortable buying shares that are involved (even indirectly) with warfare. Another risk is that the business could lose ground to the evolving nature of the battlefield. There are other companies focused a lot more on cyber and tech that could take market share from BAE Systems in coming years.

Overall, if investors are comfortable having a defence stock in their portfolio, BAE systems could be worth considering.