A $1.5 trillion arms boom: These 2 little-known stocks could benefit significantly from it

The United States is preparing its largest defense budget since World War II. The money will flow to suppliers of weapons, drones, and technology. These are two companies that stand directly in the way of that flow—and which most Czech investors have never even heard of.

One and a half trillion dollars must find a way

Wars and tensions can be followed in the news. The money that begins to flow as a result of them is harder to track—and yet it is precisely that money that will determine who profits from this situation.

The U . S. defense budget for the next fiscal year is heading toward roughly $1.5 trillion (about 33 trillion crowns), the highest amount since World War II and a year-over-year jump of about 44%. The funds are intended to replenish ammunition used in the conflict with Iran, ramp up drone production, and finance the missile defense shield, according to an analysis by the CSIS think tank.

Such a sum must find its way to specific companies. And while everyone knows names like Lockheed Martin $LMT or RTX $RTX, more interesting opportunities are often hidden a tier below.

Leidos: Big, Boring, and Suddenly Cheap

Leidos $LDOS isn’t a name you’ll see on the front pages. But for the U.S. government, it’s one of the key contractors. It develops software for the military and intelligence agencies, handles cybersecurity, manages healthcare systems for veterans, and provides airport scanners.

Things started to get interesting this past May, when the company won a $2.7 billion (about 59 billion crowns) contract from the military to begin mass production of hypersonic weapons. These weapons travel at more than five times the speed of sound, and conventional missile defense systems are practically unable to shoot them down. Leidos supplies key components for the Dark Eagle missile, on which both the U.S. Army and Navy are placing heavy bets, according to Yahoo Finance.

And what’s even more interesting for investors is that the company is already profiting from this. For the first quarter, it reported:

• revenue of $4.4 billion, up 4% year-over-year

• adjusted earnings per share of $3.13, beating analysts’ estimates

• a backlog of contracted but not yet recognized orders worth $48.4 billion, nearly three times annual revenue

In addition, management raised its full-year outlook, according to the company’s press release.

"Leidos delivered a strong first quarter, and we view the second half of 2026 as a springboard for several years of accelerated growth."

Tom Bell, CEO of Leidos

And now for the main point. Despite all this news, the stock has fallen to $100 this year, practically its annual low. The company is currently trading at less than ten times its annual earnings, although over the past five years it has typically traded at around fifteen times earnings. Meanwhile, analysts’ average price target remains around $178, well above the current level. It’s worth noting that this is a combination not commonly seen among profitable government contractors: a growing business, a specific catalyst in the form of hypersonic technology, and a post-sell-off price.

Kraken: Betting on Underwater Warfare

The second name is in a completely different league. Canada’s Kraken Robotics $KRKNF is a small company that virtually no one in the Czech Republic knows about. Yet it has bet on one of the least visible but fastest-growing trends in defense: underwater warfare.

The functioning of modern states today depends on cables and pipelines on the seabed—internet data, electricity, and gas. Sabotaging them has become a new form of conflict, and with it comes growing demand for underwater drones capable of monitoring, mapping, and defending the seabed. And these drones need two things that are difficult to manufacture: batteries capable of withstanding the immense pressure at depth and high-resolution sonar.

Kraken does both and has very few competitors. Instead of manufacturing entire drones, it supplies their key components to manufacturers around the world—the classic role of a “shovel seller” during a gold rush. In 2025, the company reported record revenue of 102.2 million Canadian dollars (roughly 1.6 billion Czech crowns), up 12% year-over-year, with an unusually high gross margin of around 62%.

And the growth is likely just beginning:

• in the first few months of this year alone, it secured new orders worth roughly 87 million Canadian dollars

• it is currently finalizing the acquisition of the British group Covelya for 615 million (around 10 billion Czech korunas), which will instantly expand the company

• its standalone outlook for 2026 projects revenue of 165 to 175 million, representing year-over-year growth of over 60%

The latest analyst recommendation for the company was “buy” with a target price of about double the then-current share price, according to The Globe and Mail.

"Both of our companies are securing a record number of opportunities and orders, and we expect this growth trend to continue."

Greg Reid, CEO of Kraken Robotics

But be aware of the nature of this stock. Kraken is a small and highly volatile company. This past spring, it rose above $7; today, it’s around $4.50. Such fluctuations are standard for small growth stocks, and the risk is commensurate.

What These Two Companies Have in Common

At first glance, Leidos and Kraken have nothing in common. One is an American giant with revenue exceeding $17 billion; the other is a Canadian minnow just getting started.

But they’re united by the same logic. Both stand directly in the path of the money that will flow into defense in the coming years, and each offers a different type of investment opportunity. Leidos is the story of a high-quality company that the market, following a sell-off, has valued unusually cheaply. Kraken is the story of a small industry specialist that most people don’t even know exists, and which is growing at a double-digit rate.

Neither is without risk—Leidos depends on a single customer, the U.S. government, while Kraken’s success hinges on its ability to successfully integrate a major acquisition and maintain its growth momentum. But precisely because they haven’t been talked about much yet, they’re among the names worth keeping on your radar before the rest of the market takes notice.