This small-cap selection is the companion theme of European Defense - Large Cap
Search of investable (relatively) small cap European defense companies, listed on U.S. OTC markets is frustrating
- Poor trading records over-the-counter (OTC) attest of the lack of information accessible to American investors
- Most firms on the panel are not specialized in defense but offer a diversified range of products, mixing civilian with military applications
With those reservations, the selection sends an important message to potential investors
- The European defense sector has gained a new lease on life with the recent NATO commitments to raise spending to 3.5% by 2029 and to 5% of GDP over time
- Special attention should be paid to German firms - first in line to benefit from the doubling of German defense budgets, committing $761 billion over the next five years - 2025-2030
- As of late July 2025, according to Reuters, Germany is preparing a wave of multi-billion-euro procurement orders, including 20 Eurofighter jets, up to 3,000 Boxer armored vehicles, and as many as 3,500 Patria infantry fighting vehicles
- Not coincidently, 4 firms in the selection are German - Heidelberger, DEUTZ
, AlzChem and Drägerwerk ; investment evaluation based on current euro share price on German markets (such as Frankfurt) is strongly recommended
Market forces are supporting the pivot towards defense
- Civilian high technology signaling and security systems fused with relative ease in defense applications
- Fast-tracking mergers and other business combinations - such as printer Heidelberger Druckmachinen
partnering with VINCORION Advanced Systems to develop power control and distribution systems for military applications - Retrofitting more or less dormant defense-related products of a global line-up in dedicated subsidiaries, for potential spin-off- such as anticipated by Italian truck and specialty vehicles manufacturer Iveco
Even so...the riches of defense budgets should not blind investors - as the perilous and volatile share price of satellite operator Eutelsat
Since the companies are often very loosely traded on OTC markets, their performance will usually reflect the trend but not the actual performance on their home market, adjusted for currency shifts - their track record on OTC is strictly informative and will justify further research
With low trading volume on U.S. OTC markets for the listed shares, performance, volatility and drawdown calculations will be affected - these ratios do not reflect true performance, volatility and drawdown as these same shares are normally traded on their national exchange
To highlight momentum and check trends, selected a short time frame - from two weeks to six months - on the menu (top right)
Investors are free to bookmark stocks of interest and to test investments in their virtual portfolio