Industrials with Defence Contracts
Hi guys The following ASX listed industrials recently announced defence contracts - Downer EDI, Service Stream, Ventia Services. What is MM’s opinion on these companies? Thanks, Roger
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Answer
Hi Roger,
We’ve discussed the defence sector a number of times in recent months, it’s a “Hot Sector” up there with gold and AI. We’ve looked at these 3 stocks highlighted individually:
Downer EDI (DOW) – This $4.8bn company is a diversified infrastructure, engineering, and services company that operates primarily in Australia and NZ. DOW recently secured a $3.05 billion, 10-year contract to manage and maintain Australian defence bases in NSW, ACT, and QLD. It also won a $220 million, 4-year deal to support critical defence IT systems for the Department of Defence.
- We like DOW initially targeting the $8 region into Christmas.
Service Stream (SSM) – provides essential infrastructure services across telecommunications, utilities, and transport sectors in Australia. It designs, builds, operates, and maintains critical networks such as broadband, energy, water, and road infrastructure. This month SSM has secured a $1.6 billion, 10-year contract with the Australian Department of Defence to manage 113 defence sites across South Australia and the Northern Territory, starting in February 2026.
- We like SSM but it feels a bit rich ~$2.50 short-term.
Ventia Services (VNT) – an infrastructure services company providing operations, maintenance, and asset management across sectors like transport, utilities, telecommunications, and defence in Australia and New Zealand. This month they secured $2.7 billion in new Australian Defence Base Services contracts starting in 2026, plus a seven-month extension on an existing defence contract.
- We like VNT into recent weakness back under $5.
While these three stocks do a lot more than just defence, more money going into this area is certianly providing a strong tailwind for them. The defence sector has surged since President Trump took office and he still has a few years to run! We regard the space as a classic “buy the dip” with short sharp washouts on the downside possible, especially if further contract wins don’t materialise.
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Downer EDI (DOW), Service Stream (SSM), and Ventia Services Group (VNT)
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Downer EDI (DOW), Service Stream (SSM), and Ventia Services Group (VNT)
