ASX defence shares have had a wild ride this year.

One company in the sector is fielding takeover approaches from two directions at once.

Another has fallen 74% from its high.

Whereas a final one has just delivered its first genuinely profitable half at scale.

All three are funded by the same wave of government spending underpinning the defence sector. This begs the question, why are there so many different narratives?

Why ASX defence shares have a decade-long tailwind

The money behind this sector is far from speculative.

Australia has committed to lifting defence spending toward 3% of GDP by 2033, which the Australian Strategic Policy Institute (ASPI) puts at roughly $96.6 billion a year in its budget brief.

That is an increase of about $53 billion on previous projections.

However, ASPI also makes the fair point that only around four cents in every announced dollar actually lands inside the current budget year.

The build-out is significant, but it is a decade-long story, and that backdrop underpins every one of the ASX defence shares below.

1. Austal Ltd (ASX: ASB)

Austal is the cheapest name here, yet also the most complicated.

FY26 revenue rose 11% to $2.03 billion, and the order book reached a record $16.5 billion.

The Australasian business delivered record earnings before interest and tax of $85.3 million, up 137% on the prior year.

The group still posted a statutory loss of $53.6 million, because provisions on legacy United States Navy contracts drove a $202.8 million EBIT loss at Austal USA.

That American problem may now be for sale.

Hanwha Defence USA has offered between US$1.05 billion and US$1.2 billion for Austal USA alone, and a second party has since held preliminary talks.

Austal’s entire market capitalisation is only about $1.8 billion.

Chief executive Paddy Gregg was clear about what this means strategically for the company:

Outside of the US, never before has the Australian business been in such an enviable position, with a long-term order book and a strategic agreement that will provide decades of stability and growth.

2. DroneShield Ltd (ASX: DRO)

DroneShield is the contrarian pick of the three.

DoneShield shares change hands near $1.75, down from a 52-week high of $6.71, a decline of roughly 74%.

The half-year numbers explain a good deal of that.

Revenue jumped 74% to $125.8 million, yet underlying EBITDA swung to a $12.4 million loss and the statutory result was a $32.2 million loss.

The balance sheet is the reassuring part, with $180 million of cash and no debt at all.

Management has reaffirmed FY2026 revenue guidance of $250 million to $270 million, and committed revenue already stands at $240.4 million.

3. Electro Optic Systems Ltd (ASX: EOS)

Electro Optic Systems had the best half of the three by a wide margin.

Revenue surged 283% to $168.8 million and underlying EBITDA reached a positive $21.6 million, against a $14.9 million loss a year earlier.

The unconditional order book almost doubled to a record $846 million.

The company still reported a statutory loss of $33.7 million, though most of that came from revaluing the MARSS acquisition payment after its own share price rose.

Chief executive Dr Andreas Schwer summed the period up:

The first half year has been exceptionally good. It has been a record year for Electro Optic Systems.

Foolish takeaway

The temptation with ASX defence shares is to treat the whole sector as a single trade. However, it is nothing of the sort.

Austal is being repriced by bidders, Electro Optic Systems by earnings, and DroneShield by scepticism.

I would rather own all three in different sizes than try to pick the one winner.

The spending is committed for a decade, which is a long time for three very different businesses to sort out their respective problems.

The post Top 3 ASX defence shares to buy right now appeared first on The Motley Fool Australia.

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• DroneShield shares have fallen 44% in 2026. Here’s why I’d buy the dip

Motley Fool contributor Mark Verhoeven has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield and Electro Optic Systems. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX materials stock Solstice Minerals Ltd (ASX: SLS) continued its stellar run yesterday. It rose 10% to open the week on Monday. 

The mineral exploration company rose 10% on Monday, and is now up an impressive 770% in the last 12 months. 

Why is this ASX materials stock soaring?

Solstice Minerals is a Western Australian copper-gold explorer focused on its flagship 100%-owned Nanadie Copper-Gold Project (Nanadie). 

It has been one of the copper shares to exploded in the last year.

This has come because investors are simultaneously pricing in record copper prices, tightening supply and a structural demand boom. 

At the same time, AI data centres, electricity grids, EVs, renewables and broader electrification are creating a powerful long-term demand story for copper.

Additionally, U.S. tariff uncertainty has pulled large volumes of metal into America and further tightened availability elsewhere. 

ASX copper miners have relatively fixed operating costs. This means every extra dollar in the copper price can translate into disproportionately higher margins, cash flow and project valuations. 

This has resulted in investors aggressively rerating both established producers and smaller exploration/development stocks. 

Why this stock can keep rising

A new report from Bell Potter has suggested this ASX materials stock still has more room for growth. 

The report highlighted that When the company bought the Nanadie site, the estimated resource was 40.4 million tonnes at about 0.40% copper, plus gold and silver.

However, since then, drilling results suggest that Nanadie is much larger than previously thought.

The mineralised zone is now around 100-200 metres wide, has been drilled to about 840 metres downhole, and extends over at least 1.3 km of strike. It is still open, meaning it could become larger.

In simple terms, Nanadie was originally thought to be a modest copper deposit. Drilling is showing that it could be a much bigger and potentially higher-grade deposit.

If the resource continues to grow and the project can eventually be developed into a mine, the company could be worth substantially more than it is today.

Big upside and buy rating 

Based on this analysis, Bell Potter has initiated coverage on this ASX materials stock with a speculative buy rating and $3.25 valuation. 

From yesterday’s closing price, this indicates an upside potential of approximately 32%. 

We initiate coverage of SLS with a SPECULATIVE BUY recommendation and a A$3.25/sh valuation. Nanadie is a genuinely large and still growing copper- gold system on granted mining tenure in a Tier-1 mining jurisdiction. We expect SLS will re-rate on release of ongoing exploration results and project development studies.

The post This ASX materials stock is up 700% this year and could be the next big copper winner appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP Group Ltd (ASX: BHP) shares represent one business that most Australians will have exposure to in their superannuation fund.

Whether that’s the superannuation fund investing in it through an ‘Australian shares’ option, Australians picking an exchange-traded fund (ETF) that owns BHP shares, or directly buying BHP shares – it has a large presence on the ASX share market.

There’s now a sizeable gap in the market capitalisation between BHP and Commonwealth Bank of Australia (ASX: CBA) following a 53% rise of the BHP share price in the last year.

But, if I were considering investing in BHP shares directly in superannuation, I think it could be a wise idea to wait before investing.

ASX mining shares are volatile

I’m not afraid of ASX share market volatility. However, it’s important to recognise that miners are often cyclical.

That’s the nature of resource prices – they go up and down depending on supply and demand. Commodity prices don’t stay consistent every month or even year to year.

A business like BHP has fairly consistent operating costs, so a rise in revenue can significantly boost profitability thanks to operating leverage.

We saw that in the 2026 financial year, with revenue rising 15% to US$58.8 billion, profit from operations improving 23% to US$23.9 billion, and underlying attributable profit climbing 30% to US$13.2 billion.

When commodity prices strengthen, it can lead to great results. Copper was the big driver for BHP – the copper price improved 35% to US$5.74 per pound, helping copper underlying operating profit (EBITDA) improve 48% to US$18.2 billion.

But, I think it would be unwise to expect that the copper price will increase by another 35% in FY27, so I’m not expecting BHP to deliver another strong year of growth.

Miners are not usually the type of business to consistently grow earnings at a similar pace year after year. I think earnings are likely to bounce around.

Why I’d wait to buy BHP shares in superannuation

BHP is a very impressive operator, one of the best in the world at what it does.

However, I think the last decade has shown how the company’s earnings can be cyclical, particularly the iron ore earnings. So, there may be a time when the market is not as optimistic about the outlook for commodities as it is right now.

I’d rather buy when the BHP share price is relatively low, which happens when commodity prices are weaker.

I do believe there will be another opportunity to buy BHP shares at a better valuation, though I don’t know exactly when that will be. But, we don’t have to buy at this higher valuation. We should look at other opportunities in the meantime if we’re trying to generate good returns.

The post Why I’d wait to buy BHP shares in superannuation appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.