4 Tiny Defense Stocks Could Make Millions?

Popular stock picker Joel Litman says America is about to unleash one of its biggest defense spending waves in decades in his latest presentation called America Unleashed. And he believes four tiny stocks could be among the biggest winners. He even claims some of these stocks could return 23X your investment and potentially turn $5,000 into a $3 million windfall. The problem? He won't reveal the name of the stocks unless you pay him a crazy $2,000. However, I sat down and watched his hour-long presentation and was able out each stock being pitched. In this video, I'm going to reveal each one completely free. There's four stocks to uncover, so we're just going to jump right into things. All stocks in this video are smaller defense stocks that are found in the defense supply chain. Now, here are the clues for the first stock. The biggest clue is that we're not looking for one of the big giant defense contractors. We're looking for a much smaller publicly traded supplier benefiting from the Pentagon's push towards faster, cheaper, and more autonomous weapons. And specifically, Joel says this company has a direct connection to Anduril, one of the hottest private defense technology companies in America. That narrows things down considerably. Because Anduril has been aggressively expanding in the drones, autonomous weapons, missiles, and other military systems. But Joel says this smaller company provides a piece of technology that helped Anduril increase part of its production process by an incredible 24 times. So, we're not really looking for a drone manufacturer. We're looking deeper into the supply chain towards the specialized equipment and manufacturing technology needed to build these weapons at scale. And the financial clues make the picture much clearer. Joel says sales are growing 30% year over year. The company has accumulated a record backlog of more than $550 million, and despite all of its expansion, he says it carries essentially no debt. The combination is pretty unusual for a relatively small defense-related company. So, put everything together, we need a small public company connected to Anduril providing specialized manufacturing technology that can dramatically accelerate defense production with roughly 30% sales growth, more than half a billion dollars in backlog, and a very strong balance sheet. The stock being pitched here is Graham Corporation, ticker G H M. In simple terms, Graham builds specialized equipment used in some of the hardest industrial and defense applications in the world. That includes equipment for submarines, rockets, energy systems, and through its FlackTech businesses, advanced mixing technology used by Anduril to speed up production of solid rocket motors. So, this really isn't a drone stock. It's more of a picks and shovels defense manufacturer supplying the equipment needed to build these next-generation weapons faster. And the business itself is growing very quickly. In its latest quarter, revenue jumped 29% to about $71 million. Backlog climbed to a record $557 million, and the company also had $27 million in cash and no debt. The biggest thing to look out for with this stock is valuation. G H M is already worth roughly $950 million to $1 billion with the stock around $82. And it trades at roughly 50 times forward earnings. So, investors are clearly already pricing in a lot of future growth. So, the question isn't really whether or not Graham is benefiting from this defense spending boom. It is. The question is whether the growth ahead is big enough to justify what investors are already paying for it. So, here's my verdict on the stock. First, I think Joel has found a genuinely interesting company here. The defense tailwinds are real. Graham has exposure to submarines, missiles, and rocket production, and now Anduril through FlackTech. Revenue is growing quickly, backlog is strong, and the balance sheet is even stronger. So, fundamentally, there is a lot to like here, but I do have a problem with the price of the stock. Even after falling significantly from its highs, Graham is still around $81 per share, giving it a very aggressive valuation for an industrial defense supplier. And I definitely wouldn't buy into the idea that this is likely to produce a 23 times return from here. A 23x move would turn today's roughly $1 billion company into something more than $20 billion. Can Graham grow substantially over the next decade? Sure. But, there's a difference between substantial growth and 23x. So, for me, Graham goes on the watchlist. I'd start getting interested if the stock fell to roughly 60 to $70. That would still give the company a premium valuation, but it would give us a much better margin of safety while participating in these defense spending tailwinds. At 81, I'm watching. Closer to 60 or 70, then I consider buying. I'm going to reveal the rest of the stocks in 15 seconds, but before I do, I want to tell you about my free report on the top 10 stocks to buy and hold right now. These are companies I believe have the best mix of strong long-term potential and growth. When you're done watching, click the link in the description, enter your email, and I'll send it straight to your inbox. Now, let's move on to the second stock. And this time, Joel's moving from the skies to the sea and is focusing on submarines with his second stock. His argument is that if the US is about to spend tens of billions of dollars expanding his naval fleet, the obvious play might seem like one of the giant shipbuilder. But, that's not the company he's looking at. Instead, he's going much deeper into the supply chain because modern submarines are basically floating power plants. Radar, sonar, computers, missile systems, and life support equipment all require enormous amounts of extremely reliable electricity. And on a submarine, the power has to be managed with basically no noise. Joel says this tiny company specializes in exactly that type of equipment, magnetics and power conversion systems used inside US submarines and surface warships. And here's where the clues start to become very specific. Joel says this company is actually the sole approved supplier for certain critical components. In other words, for some of these applications, the Navy can't simply switch to another manufacturer. The company has a backlog around $140 million, up roughly 50% from the year before. It has more cash than debt. It's profitable, and it even pays a dividend. But maybe the strongest clue of all is that the US Navy has helped fund the company's production expansion. So, we're looking for a tiny public company specializing in military power systems embedded inside major submarine programs with sole source positions, a huge backlog, and direct support from the Navy itself. Put those clues together and you get SP Manufacturing and Electronics, ticker ESP. In simple terms, SP builds highly specialized power supplies, transformers, and electrical equipment for military and industrial customers. And a major part of that business is tied directly to the Navy. Its equipment is used in submarines and surface ships where power systems have to be incredibly reliable, quiet, and capable of operating under extreme conditions. The reality check with this company is it's very small and has a very concentrated customer base. At the end of fiscal 2026, roughly 88 million of its $135 million backlog came from three major customers. Still, the numbers are pretty impressive. Fiscal revenue reached about 46 million while net income climbed to about 11 million, and the backlog of roughly 135 million represents almost three years of current annual revenue. The stock is around $59 per share giving EPS a market valuation of roughly $170 million. So, this really is a tiny defense supplier sitting directly inside a major submarine spending cycle. The question now is whether the opportunities are reflected in the stock price or whether this little company still has a meaningful room to run. So, what do I think of EPS? This one is a lot closer for me. On the positive side, this is exactly the kind of company that could potentially benefit from a multi-year defense spending cycle. It has sole source positions on certain Navy programs, a big backlog, and annual revenue about 46 million. So, the backlog alone gives the company a lot of visibility. And unlike a lot of speculative defense manufacturers, this company is actually profitable, and that matters. The biggest concern here is not actually valuation, it's concentration. A large portion of its backlog just comes from a few customers and with a company this small losing or delaying one major program could have an outsized impact. You also have to remember that small defense suppliers can be lumpy. One big contract can make the numbers look amazing one year and much weaker the next year. So based purely on business, I'd call this one a borderline buy. But there's one extra factor that pushes me over the edge and that is that SP also pays a dividend. That means while you wait for this submarine and naval spending cycle to play out, you're actually getting paid to own the stock. And for me, that slightly improves the risk reward. So my final verdict on this stock is a moderate buy. But this is not a stock I would chase aggressively or put a huge position in my portfolio. But for investors looking for a small profitable defense supplier with a real backlog, sole source positions and a dividend, I think EPS is interesting enough to start a small position. Now let's move on to stock number three which takes us to the missile defense side of the story. Joel's argument is that if the US is going to dramatically increase production of the Patriot and THAAD interceptors, you don't necessarily want to own the giant company assembling the missiles. You want to find the suppliers providing one of the critical pieces inside the system. And that's exactly what he said he's found here. The company makes highly specialized electronic technology using radar, sensors and guidance systems. In other words, the equipment that helps these defense systems figure out exactly where a fast moving target is and where the interceptor needs to go. When Joel talks about the incredible accuracy of systems like the Patriot and THAAD, this is one of the smaller companies sitting behind that capability. And the next clue narrows it down even further. Three of this company's biggest customers are Lockheed Martin, Boeing and L3 Harris. This is a very specific customer list. Joel says this company is barely followed on Wall Street with only a handful of analysts covering it. And the business is actually accelerating pretty quickly. Orders are coming in much faster than the company is shipping products out, which means backlog is building. So, put those clues together, we need a tiny public defense electronics company supplying major names like Lockheed Martin, Boeing, L3 Harris with technology tied to missile defense, radar and sensor systems, and rapidly accelerating orders. And these clues point to Frequency Electronics, ticker FEIM. In simple terms, Frequency Electronics builds extremely precise timing and frequency control systems using satellites, secure military communications radar electronic warfare, and other defense applications. Basically, these systems help military and space equipment stay synchronized and operate accurately when timing errors can't be tolerated. And this is another very small company sitting in the defense supply chain. And the business is accelerating quickly. In its latest quarter, revenue jumped 70% year-over-year to a record 23.5 million, while funded backlog reached 129 million, up 82% from a year earlier. But, there are valuation concerns. At around $73 per share, the company is now worth roughly 820 million, and it trades around 52 times forward earnings. So, there's a real growth story developing here. The question is whether the explosion in defense orders can continue long enough to justify a valuation that is already pricing in a lot of future success. So, what do I personally think about this stock? Out of the three I've covered so far, this one is my favorite. The growth is real. Revenue jumped 70% year-over-year. Backlog is up 82%. And the company is sitting directly in the middle of several major defense and spending trends. It also has exposure to some of the biggest contractors in the industry, including Lockheed Martin, Boeing, and L3 Harris. And I like that it's already producing real revenue and has a strong backlog. Like I said before, the valuation is the concern. So, personally, I'd put this one on a watchlist and wait for a pullback. But, when that pullback happens, I would buy. So, personally, I rate this a strong buy. You just have to be patient. Now, let's go over the fourth and final stock and head into the final frontier, space. Joel says this company has actually been involved in space flight since the 1960s. And even more interesting, it helped NASA during the Apollo program. So, we're not looking at some brand new space startup. We're looking for an old established engineering company that has been quietly supplying critical technology for decades. Joel says this company provides some of the foundational engineering that helps rockets survive the violent forces of launch. Because during lift-off, rockets and spacecraft are exposed to enormous vibration, shock, and mechanical stress. And if those forces aren't controlled properly, sensitive equipment can be damaged before the vehicle even reaches space. So, that means we're looking for a company specializing in things like shock absorption, vibration control, and energy management. And like the rest of the stocks that we've covered, Joel says this one is tiny. In the presentation, he values the company at around 180 million. So, put a bunch of clues together, we need a tiny public company operating aerospace since the 1960s, with a history tied to Apollo, specialized in shock and vibration control, and benefiting from a future where launch activity could continue increasing. The stock being pitched here is Taylor Devices, ticker T A Y D. Taylor Devices builds highly specialized equipment designed to absorb shock, vibration, extreme movement. Its technology is used in everything from buildings and bridges to military equipment, spacecraft, and rocket launchers. And that's where the space angle comes in. Taylor has worked with NASA going all the way back to the Apollo era, and its aerospace products has helped protect sensitive equipment from enormous forces created during launch. Additionally, it has structural industrial business as well. And its latest quarter was actually weak, with sales falling to about 7.3 million, and earnings dropping sharply. The encouraging part is underneath that. The backlog just reached a record 55.2 million, and management says aerospace and defense demand remains strong. At around $60 per share, Taylor is worth just under $200 million and unlike some of the other stocks we covered, its valuation isn't nearly as extreme. So, the question is whether that record defense backlog can turn into another major growth cycle for this tiny company. So, what do I think of the stock? Personally, it's my second favorite of the stocks we've covered in this video. The biggest reason is that the setup looks much more balanced than some of the others. You have a tiny company with real exposure to aerospace and defense and a long history of working with NASA and a backlog that just hit 55 million. That gives me confidence that the weak latest quarter may be more about timing than underlying business suddenly falling apart. And unlike the other stocks we've covered in this video, the evaluation isn't that extreme here. At around $60 per share, you're still dealing with a company worth less than 200 million, so it doesn't take an enormous amount of new business to move the needle. However, there still are risks. Revenue can be lumpy, the company is small, and the latest quarter was weak enough that I wouldn't ignore it. But, when I balance that against the record backlog, the aerospace and defense demand, and the much more reasonable valuation, I think the risk-reward is attractive. So, my final verdict on Taylor is a buy. Not quite as strong as Frequency Electronics for me, but definitely my second favorite stock in this group. And if that backlog starts converting into stronger revenue over the next few quarters, I think this one could have a lot more room to run. And before you go, don't forget to grab my free report on the top 10 stocks to buy and hold right now. These are companies I believe offer the best combination of long-term growth potential and strong underlying businesses. Just click the link in the description, enter your email, and I'll send the full report straight to your inbox.