Trump, No Peace Deal: 3 ASX War Stocks to Buy ASAP
By Fil Tortevski and Pedro Banales
With US-Iran peace negotiations collapsing and a fresh wave of bombings now underway, three ASX-listed defence stocks have been thrust firmly back into the spotlight. Each one operates in a completely different corner of modern warfare, from counter-drone technology to naval shipbuilding to critical defence infrastructure, and each one is sitting at a technical level that could define its next major move.
In the latest episode of the Australian Stock Market Show, Wealth Within's Filip Tortevski and senior analyst Pedro Banales broke down the charts, the fundamentals, and the precise levels to watch. Here's the full playbook.
The New Face of Modern Warfare
Before diving into the stocks, it's worth understanding the shift. Modern conflicts are no longer about grinding army-versus-army engagements. As Pedro put it, today's battles are drones versus drones, with sea-based drone warfare also emerging in places like Ukraine. At the same time, the battle for control of energy and trade routes is increasingly being fought on water, with tensions around the Strait of Hormuz a prime example.
That means three distinct categories of defence stocks are now in play: counter-drone specialists, naval shipbuilders, and the infrastructure providers supporting long-term defence contracts. Each of the three stocks covered today represents one of these categories.
Stock 1: DroneShield Limited (ASX: DRO)
DroneShield is Australia's biggest defence stock by profile and one of the most talked-about counter-drone and electronic warfare companies globally. The business builds counter-drone and electronic warfare systems for military and security use, exactly the kind of technology modern conflicts demand.
The Fundamental Story
Recent updates are compelling. The company reported record quarterly revenue and customer cash receipts in Q1 2026, is riding a massive global tailwind from rising drone warfare and NATO defence spending and has a large and growing pipeline of contracts across military and government sectors worldwide. After a rough patch through late 2025 tied to a structural management change, the stock has recovered and is now setting up for its next move.
The Critical Levels
DroneShield is currently stuck in no-man's-land, consolidating sideways above a long-term momentum line. The key resistance sits at $4.69, a level that has rejected price on three occasions (September, January, and March). A clean break above $4.65 to $4.70 would signal that the long-term big picture is back on, following a solid period of price agreement.
On the downside, the ideal scenario would actually be a retest of the momentum line somewhere between $3 and $3.20, which would offer a much better risk-reward entry for a move back toward $5. The broader setup, long-term accumulation, expansion, test of previous all-time highs, and consolidation above $3, is textbook bullish structure. With volume easing during the sideways phase and news flow potentially reigniting momentum, a sharp directional move is likely not far away.
Stock 2: Austal Limited (ASX: ASB)
Austal is Australia's largest naval shipbuilder, constructing defence ships and military vessels for both Australia and the United States. With countries increasingly forced to defend their own trade routes and energy supplies, shipbuilding is arguably one of the most strategically important sectors globally.
Why Austal Matters Right Now
Austal holds a massive multi-year defence order book tied to the AUKUS agreement and US naval expansion. Revenue growth has surged as defence production ramps up, and the company is directly leveraged to both Australian and US naval spending cycles. Trump's recent signal that countries needing oil should use their own navies to secure it underscores exactly why shipbuilders like Austal are positioned for sustained long-term growth.
The backstory also matters. A Korean shipbuilder previously tried to acquire Austal outright, which our regulator blocked. They then began on-market purchases, driving the strong uptrend from around $3.20 with clear volume accumulation.
The Critical Levels
After rising roughly 200% from its prior highs, Austal has become overbought and is now pulling back aggressively. The key level to watch is $3.80, a historically significant support and resistance zone going back to 2019 and again in 2025. A break below that could see the stock find next support around $2.80.
On the upside, the first meaningful resistance sits at around $4.50, a zone where price has found agreement multiple times. This is a classic reversal story in the making. As Filip pointed out, the long-term structure (new all-time high, test, rally, repeat) is still fully intact, and the current pullback may simply be returning the stock to a more sustainable rate of rise before its next leg up.
Stock 3: Service Stream Limited (ASX: SSM)
Service Stream is the most unexpected name on the list, but arguably the most interesting. The company provides infrastructure maintenance and defence support services for government, telecom, and utility networks. It's been pulled into the war conversation because of a recently secured large long-term defence contract.
The Fundamental Case
The defence contract is expected to contribute around $240 million in annual revenue from FY27 onwards. Critically, Service Stream is far less volatile than most pure-play defence names because of its diversified infrastructure exposure, making it a genuinely interesting "defensive defence" play. It also trades on a reasonable P/E of around 24 and still pays a roughly 2% dividend yield, which is notable given the stock has risen 235% from its lows.
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The Critical Levels
SSM is testing a key level right now. After a strong multi-year uptrend that respected a clean momentum line, the stock recently had its most volatile downside month since August 2022, a roughly 23% correction that was almost entirely bought back within the same month. That's a classic sign of strong underlying demand.
From current levels, upside potential sits at roughly 20% back to the highs around $2.50, and 48 to 50% for a new all-time high, particularly once the FY27 defence revenue starts flowing through the numbers. A conservative confirmation trigger is a clean break above $2.30. With the trend, momentum, and fundamentals all aligned, this is a classic continuation-of-trend setup.
Three Different Setups, Three Different Stories
What makes these three stocks so interesting is that each represents a different type of trading opportunity:
DroneShield is a breakout story. It needs to clear $4.65 to trigger the next major leg, but is offering a clear lower-risk entry near momentum support in the meantime.
Austal is a reversal story. After an overextended 200% run, the stock is pulling back to a genuine support zone where buyers have historically stepped in aggressively.
Service Stream is a continuation story. The trend is intact, momentum is clean, and the stock is already resuming its upward trajectory after a sharp but short-lived correction.
Understanding which setup you're trading matters enormously. Breakouts, reversals, and continuations each require different entry timing, different stop placement, and different expectations about when the move will unfold. Confusing them is one of the fastest ways to lose money.
Why War Stocks Need Proper Analysis
It's tempting to simply buy defence stocks on headline escalation, but that approach rarely works. Stocks often price in news faster than retail traders can react, and buying late into a spike almost always leads to being the exit liquidity for smarter money.
The traders who consistently profit from these setups don't guess. They identify precise technical levels, wait for confirmation, size positions properly, and manage risk with defined stops. That's exactly what technical analysis is designed for, as Pedro put it perfectly: "It's not reading tea leaves. It's just seeing where buyers and sellers have agreed to in the past."
For ongoing market analysis and stock ideas like these, check out Wealth Within's Hot Stock Tips videos from the Australian Share Market News, or learn more about Wealth Within and our 24 plus year track record in delivering results-driven trading education.
Final Thoughts
With geopolitical tensions rising again and defence spending committed at scale across NATO, Australia, and the US, the long-term tailwind for these three stocks looks durable rather than speculative. DroneShield, Austal, and Service Stream each offer a clean, definable trade with clear risk-reward profiles and clear invalidation points.
Whether or not any of them deliver the upside on offer, the analytical process behind identifying them is the real long-term edge. Traders who can read charts, understand market structure, and execute with discipline consistently outperform those chasing headlines, regardless of what the geopolitical environment throws at the market.
Disclaimer: This article is general in nature and does not constitute personal financial advice. Always conduct your own research or consult a licensed adviser before making investment decisions.
