4 Best AI Defense Stocks With Massive Upside Like Palantir‼️(Under $20)

Palanteer is the poster child for successful AI investing, especially for those AI companies tied to the defense industry. Now, the company has delivered absolutely insane returns for early investors, turning even a small position into life-changing wealth. Now, the bad news is that the easy money has uh already been made on Palunteer. The good news, I have found four other AI stocks involved with the defense industry that have pretty similar DNA to Palanteer in its early days. Even better is they are all trading under $20 per share. As per usual, I'm going to save the best one for last, so keep watching all the way to the end. By the way, I'm Steve Wrightmeister, but everyone calls me Righty. I'm currently a partner of Wall Streetzen.com, where our quant team built the Zen Rings quant model that analyzes 115 different factors for every stock that points to future outperformance. And yes, I use the Zen ratings to find the stocks I'll be talking about today. And if you like uh the idea of finding tomorrow's big winners before they take off, then hit that like button right now, as it tells me to record more videos like this on the future. The first stock I'm going to talk about is a name you'll most certainly recognize in BlackBerry with the symbol BB. I'm sure this is a headscratcher to you on a couple levels. First, you probably assume the stock was dead. And second, what the heck do they have to do with AI and defense? Now, hang in there with me for a second. I'll explain both parts. But first, let me quickly explain what I mean when I say that today's stocks have Palunteers DNA because this is the vital framework I use to find these special stocks that should be the winners of tomorrow. When you study what led to Palanteer's more than 2,000% gain in the past few years, two clear traits stand out. Number one, deep technology with high barriers to entry. Palanteer didn't just slap AI on to existing products. They built Foundry and AIP from the ground up and made these platforms so embedded and essential in their customers operation that switching costs are enormous and almost unthinkable. Number two, government defense revenue becomes a serious tailwind. Now, Palanteer's government contracts gave them a revenue and profit floor that let them invest and grow even when the commercial adoption was a little bit slower with today's huge defense budget on the table. Companies with established government relationships are positioned to capture a massive wave of new spending. I look for companies with these two traits as well as an additional third trait which is scoring highly in our Zen reigns quant model. That's because our top rated stocks have a long history of beating the overall market by a very wide margin. Getting back to the story for Blackberry. All right, their infamous phones with the pronounced keyboards are long gone. What's left is a pure software company with two businesses that fit that Palunteer DNA perfectly. The first is uh QNX, maybe Unix. This is the embedded operating system uh running inside more than 275 million vehicles plus medical devices, industrial robots and defense system. They are working with 45 different automakers including the top 10. Recently, BMW chose them as the core safety layer for its next generation vehicle architecture. Here's why all that matters for earnings growth in the share price. Q&X is licensed on a per unit royalty basis. The software is already written uh and paid for. Every additional vehicle that rolls off that line pays BlackBerry a royalty with almost no additional cost attached. That's about as high margin as software can get. The second is their secure communication segment. Now, BlackBerry provides encrypted messaging and critical event management for governments and militaries around the world. Just this spring, BlackBerry renewed and expanded its long-standing secure communications partnership with the government of Canada. When a national government keeps extending a contract year after year, that's the kind of recurring predictable profit that Palunteers enjoyed. And now we see BlackBerry doing the same. Yes, it's true that BlackBerry lost a lot of money for a lot of years, just non-stop red ink from 2020 through 2024. Here is what far too many investors are missing. Then management initiated a long overdue turnaround starting with the sale of its money losing silence cyber security unit. Then they stripped out cost and focus the company on the two businesses that actually make money. The result is a very welcome return to profitability in 2026 with signs of ramping up in growth from here. Right now, Wall Street analysts are expecting 700% earnings growth this year over last, which is pretty easy to do when you're barely profitable. That is a mark of a turnaround unfolding and from there it normalizes to a a healthy and quite attractive 20% a year pace. Some investors have taken notice with shares up nicely in the past year. However, after a recent round of profit taking, shares have shed 25% from their highs and now we can pick up shares for under 10. Wall Street analysts are certainly starting to take notice which is why fair value targets point to as much as 70% upside in the year ahead. Now we're going to put uh BlackBerry under the microscope of our proprietary Zen ratings squat model. All in all, every stock is analyzed across 115 different fundamental, technical, and AI factors. Then we share the insights with an intuitive letter grade of A through F. BlackBerry is indeed quite impressive, coming in the top 18% of all stocks uh reviewed by the model. This leads to a B- rating, which we call a buy recommendation. Now, that makes a heck of a lot of sense because historically B-rated stocks have more than doubled the market. We can further appreciate the strengths and weaknesses of any stocks by considering our seven component rates. That starts with a top 15% showing for growth which foreshadows more earnings speeds ahead. Then we have a top 14% showing for sentiment which tells you the smart money crowd is already on board these shares. Now let's be honest about the risk. All turnarounds are risky propositions as they could fall apart at any time. But when it goes right, then turnarounds offer truly tremendous upside potential. And with BlackBerry buying into the Palunteer blueprint of building a foundation of recurring government contracts, then you understand where these shares belong in our video today and maybe belong in your portfolio as well. And by the way, if you like discovering high potential stocks like this, then you should join me for my next live training session this coming Monday. This is where I focus on the current market outlook and my favorite stocks to outperform. These live sessions are totally free, but you do need to register and you can do that now. To join me this coming Monday, just go to wall streetzen.com/live. Next up is our second stock in Lantronics with the symbol LTRX. This one comes with the most share price upside potential in our video today. According to Wall Street analyst, Vantronics builds the uh compute modules and connectivity gear that let AI run at the edge of the network. Think about the computing that takes place inside a drone or a vehicle or a piece of field equipment rather than back in a data center. That's exactly where defense are headed. The military wants AI that works at the tactical edge disconnected from the cloud and Lantronics is already leading the way there. In fact, their hardware is already NDAA and TAA compliant, which is a requirement for Department of Defense deployments and a real barrier to entry for a lot of their foreign competitors. All of this has led to a number of high-profile partnerships and collaborations. Like earlier this year, Lantronic signed a deal with SAFE Pro Group to build ondevice threat detection for drones and unmanned systems. And in July, it announced a collaboration to supply edge computing for FPV drones, fixedwing UAVs and interceptor systems being deployed in the Ukraine. Management is also noted that many of its partners and customers were named in the Pentagon's new 1.1 billion drone dominance program. Now, Lantronics is a leader in computing aspect inside the drones. this new program is buying into big time. Just like Black Player, we are seeing an important crossover from previous losses to freshly minted profit. And that profit looks set to accelerate moving forward, which should help drive share price uh gains. Wall Street coverage is light but still very potent. This starts with all three covering analysts in the buy or strong by camp. Even more telling is what they are all saying about the fair value price targets where the average is 110% above current levels. But the most bullish voice, Josh Sullivan at Jones Trading, who ranks in the top 1% of all Wall Street analysts based upon his actual stock performance. He recently initiated coverage with a price target that implies nearly 100% upside potential in the year ahead. Once again, the Zen ring smiles in the stock. In this case, another uh B rating, which is a buy recommendation because they are in the top 60% of all stocks we track, pointing to a truly stellar fundamental profile. gladly even gets better as we get under the surface with the component grade starting with growth uh which is truly elite right that grade is in the top 0.4% and 4% of all stocks, which foreshadows a lot more growth and earnings beats ahead. The risks are what you would expect with a small company this size. Lantronics is a micro cap under $250 million, uh, you know, market cap, and that share price is going to be a little bit more of a roller coaster ride here. Again, about what you would expect. However, it recently has endured a 30% sell-off from the highs. This creates a fantastic buy the dip opportunity for those with the stomach to handle that extra volatility. Before I get to our first Elite A-rated stock in the video today, I want to check in to see how you are enjoying today's video. If you like what you see, then it's definitely the time to click subscribe and hit that notification bell. That's because I publish top stock pick uh videos like this regularly, and you don't want to miss the next ones when they come out. Let's get back to our top stocks today with the sneakiest AI defense play on the list. That's because on the surface, it doesn't look like a defense company at all. I'm talking about DHI Group with a symbol of DHX. Please note there's another company with a ticker of DHI. So I'm going to just keep calling it DHX going forward to avoid any confusion. DHX runs the technology jobs website dice.com. But the crown jewel is clearancejob.com. The largest career network for professionals with active US government security clearances. Every defense contractor, every intelligence agency, every company chasing the glittering defense uh budgets needs cleared specialists and there is a chronic shortage of them. Clearance jobs is where this hiring happens. Is a segment LinkedIn doesn't even serve. Employers pay subscriptions to access the cleared uh talent pool and DHS's panted AI matching engine with a 100,000 skilled laborers in there. It connects them all. Over 90% of DHX's revenue is recurring subscription revenue with auto renewals and built-in price escalator. That's an impressive revenue floor to build this business on. Now, here's where the story gets even more interesting. In March, they acquired Point Solutions Group, which is a recruiting firm specialized in, you guessed it, in government clearance jobs. Truly, DHX is doubling down on their sizable advantage in this growing segment. The benefit of this focus on government clearance jobs is making its way to the bottom line with a massive surge in earnings growth this year over last. Growth is nice, but growth plus value is much, much nicer. And this comes showing up in spades with a rock bottom peg ratio of 0.2. Please remember the average PEG is seven times higher around 1.5. So these shares are truly dirt cheap. Just like our last company, they have just three Wall Street analysts covering shares. Gladly all three are issuing buy and strong by recommendations. This includes uh Gary Prespatino at Bington Research who ranks in the top 2% of all Wall Street analysts for a stock picking performance, meaning he knows a thing or two about picking good stocks. and he is downright pounding the table with a price target 120% above current levels. Wall Street is not alone in bullish support of these shares. That's because DHX earns a top-notch Agrade from the Zen rings model. Over the years, A-rated stocks have nearly tripled the returns of the S&P 500. Now, it strength shines through in the impressive roster of component grades that starts with the top 16% showing for growth. Momentum is a notch higher in the top 12% pointing to these being very timely shares. Financial strength is in the top 11% of all stocks and the standout grade is the 4% showing for sentiment. Now this is a signal the smart money is already moving into these shares just like the last stock in Lantronics. We are talking about another small company only 200 million market cap. Thus you should expect a little extra volatility in the shares. Yet here we have a company doubling down on its major advantage of filling defense industry jobs that require special clearance. Plus, Wall Street and is in range is shining a light on this exciting opportunity. Now, consider if it deserves a place in your portfolio as well. The last stock in the video today is my highest conviction pick and it's the one that most directly is building the kind of AI that governments and banks can operate without. One quick thing before we get to that last stock. If you want to stay a step ahead of the pack, then join me live every Monday. That's when I share my updated market outlook and trading plan to outperform. This is also when I unveil my trade of the week based upon our proven Zen rings quant model and my greater than 40 years of investing experience. It's a free event, but you do need to register and you can do that now. Wall Streetzen.com/live or click the link in the description down below or scan the QR code that's showing up on your screen, whichever side of me it's on. Just pause the video for a moment to sign up. I'll be patient and wait for you and I look forward to seeing you there on Monday. Now, let's finish strong with our fourth and final stalk in Mitech Systems with the symbol of MITK. This is a cyber security company that does one thing extremely well. It verifies that you are who you say you are. Now, it uses an AI platform that reads uh identity documents, right? Passports and the like, matches your face, detects deep fakes and voice clones and flags fraud in real time. If you've ever deposited a check by taking a photo with your phone, then most likely that was Mitech's technology. Mitech pioneered mobile check deposits and thousands of US banks and credit unions rely on his platform. That's a nice base of business to build on top of. And here's the defensive angle. Identity verification is now a national security problem. Deep fakes, synthetic identities, and AI generated fraud are exactly the threats that government agencies and defense contractors and regulated institutions are scrambling to defend against. And like Pounder, this is deep technology built from the ground up over 40 years embedded in customer workflows with patents and deep uh data advantages that make it very hard to replace. The proof that shows up in the numbers starting with 100% annual earnings growth the past 3 years. Amazingly, experts see that ramping up to 135% earnings growth in the year ahead. Even with all that growth in the forecast, Mitech shares trade for a poultry Ford PE of just 17. On top of that is a very modest PEG ratio of 0.67. That means shares could more than double and still have a lower PEG ratio than the average stock these days. Yeah, very undervalued shares. And here's something industry. There's almost zero Wall Street coverage on this name. However, rather than a warning sign, this could simply be an indication the crowd has not caught on to the story yet. Their loss are gain. Glad rings helps fill the gap of this Wall Street shortcoming thanks to the full 115 backtory review of the model. My tech scores in the top 1.3% of all stocks in our model, leading to a coveted A rating. To be clear, it means that it is better than 98.7% of the other stocks reviewed in the Zen rating system. Its strength shows up in particular with two of the key component grades. That starts with financial strength, the top 7% of all stocks, and then we have the top 5% for growth. These are the two most vital component grades that point to future share price outperformance. That's because they prove operational excellent that has a way of showing up time and time again in future earnings reports which begets serious share price gains. This has become a much more timely story given recent research talking about hackers using AI leading to a surge in cyber attacks. As long as my tech stays on the forefront of online protection, then it's easy to see more growth and more share price gains ahead. There you have it. four stocks with some of that potent palunteer DNA yet trading for much much more reasonable valuations. This could lead to serious outperformance in the months and years ahead. Now is a good time to remind you the Zen rings are updated daily. So if you want to keep tabs in the rings for these four stocks or any stocks and be sure to check out the quote pages on wall streetzen.com. Now I want to hear from you. Which of these four stocks are you most interested in? Or maybe there is another AI defense name you think I miss I should cover in future videos. Please drop your thoughts in the comments section below. And if you're looking for more undervalued stocks, then I strongly recommend that you check out the video coming up on your screen right now.