Rolls-Royce and BAE Systems are the two most popular FTSE defence stocks. And for good reason – both are seeing strong revenue growth as countries across the world ramp up their spending on defence solutions.
However, over the last six months, another FTSE defence stock has outperformed these two names by an enormous margin. Could it be worth a closer look right now?
A UK defence stock no one has heard of
The stock I want to highlight here is Kromek (LSE: KMK). It’s a small British company that provides nuclear radiation detection solutions to the global homeland defence and security markets.
It’s known for its compact, handheld, high-performance radiation detectors. These are used to protect urban environments and critical infrastructure from the threat of ‘dirty bombs’.
An AIM-listed penny stock (it’s a member of the FTSE AIM All Share index), Kromek currently trades for just 9.3p. That means that a £1,000 investment would buy around 10,750 shares.
In terms of performance, the stock has experienced a pullback in recent weeks. However, over the last six months, it has surged around 80%, leaving Rolls-Royce and BAE Systems shares in its dust.
Long-term growth potential
Now, penny stocks like this are risky investments. Often, their share prices swing around wildly.
However, taking a long-term view, I see a fair bit of potential here. Given the company’s defence and national security exposure, there’s plenty of scope for revenue growth.
This side of the business has certainly been performing well recently. In the six-month period to the end of October 2025, sales in the company’s chemical, biological, radiological, and nuclear defence (CBRN) division more than doubled to £4.3m, reflecting the growing global focus on national security.
Note that in the company’s H1 results, published in January, it said that in the current year to date, it had received new CBRN detection orders worth £4.8m. These were from customers across the UK, Europe, the US, Japan, Canada, and Australasia.
Medical revenues too
I’ll point out this company is not just a play on defence. It also provides advanced imaging solutions for the healthcare and industrial industries.
Recently, revenues in the company’s advanced imaging division have been boosted by a major deal with Siemens Healthineers. This deal will see Kromek provide cadmium zinc telluride (CZT) detectors for SPECT (single-photon emission computed tomography) imaging.
Tipped to rise 170%
While this is all exciting, I want to stress that this is a high-risk stock. Looking ahead, major contracts could be sporadic in nature meaning that growth won’t be linear.
Profitability is another risk to consider. This is a small company (market cap of £63m) so I’d expect its profits to be volatile.
I think it’s worthy of further research, however. Note that the average broker price target is 26p – about 180% above the current share price.
