NATO Steps Up - Defence Stocks In Focus: Dassault Aviation, OHB, HPQ Silicon and DroneShield

Dassault Aviation and OHB: Cooperation in orbit

NATO is moving forward and bringing Europe's military infrastructure up to scratch. Leading the way are the familiar players in the defence sector from Germany and France. As the latest news indicates, Dassault Aviation and the Bremen-based aerospace group OHB will play a key role in the near future. The French government, under President Emmanuel Macron, officially announced its support for developing the innovative, reusable VORTEX spaceplane in September 2026. In this civilian and military orbital project, Dassault Aviation leads the overall architecture and system integration, while OHB handles the critical service module. Other European partners, such as MT Aerospace and Sener, support the core team, and a first, smaller demonstrator called VORTEX-D is due to complete its maiden suborbital flight as early as 2028. The larger VORTEX-S, with a payload capacity of up to 2 tonnes, is planned, but only in the more distant future.

Alongside these new space ambitions, Dassault Aviation is also making major strides in advancing European air sovereignty. Following the end of the trilateral FCAS fighter jet project, the French defence group is focusing intensively on the new Rafale F5 standard. This modernised platform will form the technological core of future air combat, alongside unmanned companion systems called "Loyal Wingman". Dassault is also benefiting directly from European financial aid, as Ukraine recently placed a historic order for 16 Rafale fighter jets, co-financed through an EU support loan. Dassault shares are using this momentum to recover to EUR 299, after only recently testing the EUR 275 level. At OHB, too, prices below EUR 160 are likely a thing of the past, with prices above EUR 200 quoted again at times yesterday. Nevertheless, the previous high of around EUR 676 is likely to remain outside the target zone for now. Analysts on the LSEG Refinitiv platform have set a price target of EUR 375 for Dassault, while for OHB it is a respectable EUR 305, or around 50% upside. Following the sharp correction, technical buybacks are very likely, but investors should keep an eye on OHB's 2027 P/E ratio of around 40, compared with a modest 16 for Dassault. Exciting!

DroneShield: Investor Concerns Fuel Sell-Off

Now it has happened! The share price of Australian counter-drone specialist DroneShield continues to plummet despite a healthy operational order situation. The price reached EUR 0.90 yesterday, leaving it only about 12% above the 52-week low of around EUR 0.80. The main reason for the massive share price decline is severe margin compression, which has pushed the company into the red despite its dynamic growth. The sharp rise in operating costs in particular is weighing on the balance sheet and most recently resulted in a surprisingly high net loss of AUD 32.2 million. At the same time, recent EU orders appear to have already priced in high expectations, with a market capitalisation temporarily exceeding AUD 1.5 billion, suggesting speculative investors are now pulling the ripcord. This once again shows that a bulging order book alone does not guarantee rising share prices if profitability and cost control fall short of expectations. The unregulated insider share sales from 2025 remain under investigation. These events are hardly a good advertisement for the Australians. We therefore continue to urge caution even at this level, as the stock is anything but cheap despite the correction, trading at 7 times 2026 sales!

HPQ Silicon: Europe Puts the Company on Track for Growth

The close link between raw-material supply and defence procurement plays a decisive role in stabilising European partners' industrial supply chains during a crisis. Canada's accession to the European defence initiative SAFE in early 2026 underscores how closely the two regions' security architectures are now merging. This gives Canadian companies direct access to European tenders, accelerating the development and production of complex defence equipment. Beyond the flow of materials alone, the alliance benefits from an extensive exchange in research and development for resilient, closed-loop value chains. Finally, the cooperation sets global benchmarks, as both regions promote the strictest environmental and social standards in mining and downstream industrial processing.

Silicon technology specialist HPQ Silicon provides a good example of transatlantic cooperation. Together with their French development partner Novacium, the Canadians are pursuing the goal of developing higher-performance lithium-ion cells and gradually transferring them to industrial applications. The portfolio also includes a novel process for producing fumed silica, as well as technologies for hydrogen production and energy recovery from waste. In mid-October, HPQ reported a notable step toward commercialisation, announcing an agreement with Aptera Motors, a publicly traded US developer of solar electric vehicles, to conduct technical testing of its HPQ ENDURA+ GEN4 battery cells. As part of this evaluation, Aptera will test these high-performance lithium-ion cells in the cylindrical 21700 format, using silicon-anode technology developed by Novacium. The planned laboratory tests are intended to determine whether the cells can meet the requirements of a vehicle concept built around low energy consumption, aerodynamic optimisation and integrated solar power generation.

For HPQ, this agreement is of interest because it opens access to another field of application beyond the drone and defence markets, which have so far been targeted intensively. In electric vehicles in particular, higher energy density and more efficient use of the available installation space can offer decisive advantages, although the ongoing tests have yet to demonstrate the actual suitability of the HPQ ENDURA+ battery cells. With its efficiency-focused vehicle architecture, Aptera has gained a suitable technical testing partner, while HPQ can have its cell technology assessed against specific automotive requirements. This further strengthens the Canadians' investment story, as HPQ is expanding its circle of potential industrial users following progress in Gen4 cell certification and initial battery orders for FPV drones.

HPQ holds a 36.8% stake in Novacium and owns the exclusive marketing rights for the relevant battery technologies in North America, enabling the company to participate in both technological development and potential future commercial revenues. Alongside the battery platform, the HPQ Silica Polvere 50/50 joint venture with PyroGenesis for fumed silica and the HyDRAS™ hydrogen technology remain further potential value drivers that could open up additional markets in the long term. The Aptera test is not yet a commercial breakthrough, but it is another step beyond the development stage. Despite its technological breadth, the company is still valued at around CAD 60 million. This clear undervaluation should not last much longer!

Conclusion

The strategic rapprochement between Europe and Canada in the defence and raw materials sectors forms a crucial foundation for strengthening the transatlantic security architecture over the long term. By combining Canadian metal deposits with European high-tech affinity, the alliance is managing to stabilise critical supply chains and drastically reduce the risky dependence on autocratic markets. Shares in the defence sector have just undergone a correction. A reason for investors to reconsider their portfolio weightings. Healthy diversification protects against excessive volatility.