Dan Victor, The Motley Fool

Sat, May 17, 2025, 1:32 AM5 min read

• Shares of Huntington Ingalls Industries have rallied at the start of 2025 as the Trump administration aims to revitalize U.S. military shipbuilding funding.

• The company expects to receive more than $50 billion in new contract awards over the next 20 months, adding to its extensive order backlog.

• The stock is well positioned for further gains, supported by solid fundamentals.

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Huntington Ingalls Industries (NYSE: HII) has emerged as a stock market outperformer in 2025, rewarding shareholders with a solid 21% return year to date as of this writing.

The defense contractor, recognized as the largest military shipbuilder in the United States, is set to capitalize on several growth tailwinds. The new Trump administration has proposed increased funding for domestic shipbuilding programs, which directly benefits the company's unique market positioning. The company's outlook is further bolstered by an extensive order backlog set to drive increasing earnings.

Here are four reasons I believe shares of Huntington Ingalls are a great buy for your portfolio now.

U.S. Navy aircraft carriers and nuclear-powered submarines are modern engineering marvels of unparalleled complexity, with Huntington Ingalls Industries leading innovation in the field. The company's Newport News Shipyard is the only U.S. facility capable of constructing Gerald R. Ford-class aircraft carriers, among the most technologically advanced warships globally.

Huntington Ingalls' shipbuilding division also constructs Arleigh Burke-class destroyers and San Antonio-class amphibious ships, essential for surface combat and troop deployment. Additionally, the company's Mission Technologies division develops uncrewed undersea vehicles (SUUV) like the Lionfish, alongside cybersecurity solutions and AI-driven autonomous systems, highlighting its diverse defense offerings.

This critical role in producing key defense assets positions Huntington Ingalls as an indispensable partner to the U.S. Department of Defense, enhancing its appeal as a potential investment.

A major theme in the new Trump administration has been revitalizing U.S. military strength to counter China's advancements in high-tech systems like hypersonic missiles and AI-enhanced naval technologies.

President Trump outlined plans to boost shipbuilding for national security and economic growth during a joint address to Congress in February. This was followed by an Executive Order in April titled "Restoring America's Maritime Dominance" aimed at strengthening domestic shipbuilding capabilities, enhancing maritime workforce training, and ensuring adequate commercial vessel capacity for national security. Huntington Ingalls Industries should benefit from these policy directives.