Sunday Research Pipeline Session #8: 3 more Defense Stocks On Our Watchlist
Coincides with our defense themed virtual conference this week
It’s been over a month since we published a Sunday Research Journal post, our eighth in this series. Ahead of our Starting Five Defense Virtual Conference, it’s only fitting that this installment focuses on three stocks with defense themes.
One of these stocks is Kraken Robotics (CVE:PNG) — a name admired by several sharp investors and a leader in the subsea industry, an area where our Microcap Quality Index already has strong exposure.
Another just landed a series of big contracts. It’s a company I’ve been watching for years, waiting for the right setup to get excited about. The interesting part is how it’s been quietly cutting expenses, setting the stage for EPS to accelerate even on modest revenue gains. Based on the current backlog, the stock trades at a forward P/E of roughly 10.7x. After years of underperformance, it’s become one of those “hated” microcaps which, of course, makes me even more interested.
Finally, we’re tracking a quirky hybrid that pairs a defense business with a steady, cash-generative commercial operation. The commercial side acts as a “cash cow,” not growing much but providing consistent funding for the rest of the business. After years of treading water, the defense arm is finally showing operating leverage, with backlog and margins rising, and management quietly buying back shares through private transactions. On a simple run-rate basis, it’s still trading at a single-digit P/E despite a leaner cost structure and recurring service programs tied to established defense platforms. The market doesn’t care yet; earnings might force it to.
We began publishing Sunday Research Journal Research post May 2025. These posts cover stocks we identify from our daily [MultiBagger] research watchlist that are beginning to get our attention, which might be in-line to be added to our microcap quality index (MSMqi), but only if further research justifies such a move. However, we still track the returns of these stocks. Sunday Research Journal Research posts are published as new ideas enter our funnel, as opposed to “every Sunday.” To view the performance dashboard for all stocks highlighted in our Sunday Journal, visit this link.
To see our summary on three stocks please read below: