2 ASX Defence Penny Stocks to Watch in a Volatile World

In a world marked by geopolitical uncertainty, rising defense budgets, and rapid technological advancement, the defense sector has become a hotbed of opportunity for investors. While major defense contractors often dominate headlines, it’s the smaller, agile players—those developing innovative technologies and niche solutions—that are capturing attention for their growth potential.

Two such promising names on the ASX are HighCom Limited (ASX: HCL) and Titomic Limited (ASX: TTT). Both are defense penny stocks—trading at relatively low prices—but are backed by strong innovation, growing order books, and expanding global footprints. In a volatile environment, these companies stand out as potential long-term winners.

HighCom Limited: Advanced Defence Tech with Growing Orders

HighCom Limited is fast emerging as one of the most interesting small-cap defense technology firms in Australia. The company designs and manufactures advanced ballistic protection, armor systems, and counter small uncrewed aerial systems (C-SUAS). These solutions cater to a growing global market where governments and security agencies are rapidly upgrading their defense infrastructure to counter modern threats such as drones and urban warfare.

Strategic Growth and Operations

HighCom’s major strength lies in its technological innovation and manufacturing scalability. The recent recommissioning of its XTclave system in Ohio has doubled its production capacity in the United States—a vital move considering the U.S. remains the world’s largest defense market. This facility supports ballistic armor production and advanced composite materials manufacturing, enabling the company to meet increasing global demand.

Financial Highlights

1. FY25 Revenue: $48.1 million, reflecting a 6% year-on-year increase.
2. Net Loss: Reported a small loss for FY25 but showed a marked improvement from prior years, indicating operational progress.
3. Order Book: Strengthened by several significant contracts, including a $2.6 million C-SUAS deal and an $8.9 million order for ballistic products.
4. Share Price Performance: The stock gained 25% in 2025, defying broader sector volatility.

HighCom’s growth story is backed by a clear focus on innovation and execution. The company’s ability to win new contracts—even amid economic uncertainty—demonstrates the growing demand for its defense-grade technologies.

With more countries ramping up their defense spending, HighCom is well-placed to benefit from these macro tailwinds. The company’s expanding U.S. operations and steady revenue growth signal that it’s moving closer to sustainable profitability.

The Investment Case

HighCom’s edge lies in its ability to deliver real-world defense solutions with immediate applicability. Ballistic armor, drone countermeasures, and protective systems are increasingly essential to both military and law enforcement operations. As global security risks persist, HighCom’s products remain in high demand.

For investors, HighCom presents a compelling mix of innovation, revenue momentum, and market relevance—all wrapped within an attractively priced penny stock.

Titomic Limited: World Leader in Additive Manufacturing for Defence

If HighCom focuses on protection, Titomic Limited (ASX: TTT) is revolutionizing production. The company is a world leader in cold spray additive manufacturing, a cutting-edge process that creates strong, lightweight metal components for defense, aerospace, and industrial applications.

Unlike traditional 3D printing, Titomic’s cold spray process fuses metal powders at supersonic speeds, producing parts that are not only stronger but also more cost-efficient and faster to produce. This technology has game-changing implications for defense manufacturing—enabling lighter vehicles, durable weapon systems, and faster maintenance cycles.

Strategic Expansion in the U.S.

Titomic’s new 59,000 sq. ft. headquarters in Huntsville, Alabama—a hub for the U.S. defense and aerospace industries—marks a major milestone in its international expansion. This facility anchors Titomic in one of the world’s most advanced defense ecosystems, positioning it to secure contracts with top-tier defense contractors and government agencies.

The company is also investing heavily in R&D and leadership. With former senior military officers joining its executive team, Titomic is aligning its expertise with defense priorities, strengthening its credibility within the industry.

Financial Highlights

1. FY25 Revenue: $8.1 million, up 37% from FY24’s $5.9 million.
2. Capital Raises: Successfully raised $80 million to fund U.S. expansion and product innovation.
3. Net Loss: $19.9 million, typical of a scaling tech firm investing in growth.
4. Strategic Hires: Strengthened leadership team with industry veterans and defense experts.
5. Global Presence: Established new R&D and production facilities across the U.S. and Europe.

Titomic is clearly in the growth phase—investing heavily in technology, infrastructure, and partnerships. While it’s yet to achieve profitability, the company’s consistent revenue growth and strategic global positioning make it a strong contender in the emerging defense-tech landscape.

The Investment Case

Titomic’s potential lies in its disruptive technology and the scale of its addressable market. The global defense sector is actively seeking cost-effective, high-performance manufacturing solutions—and Titomic’s additive technology fits that need perfectly.

Its partnerships and capital strength provide the foundation for future contract wins, making it an exciting long-term growth play in the defense manufacturing sector.

Why Watch These Stocks?

In a volatile global environment, defense spending is one of the few areas seeing consistent growth. Nations are prioritizing security, modernization, and technological self-sufficiency—creating strong tailwinds for companies like HighCom and Titomic.

Here’s why these two penny stocks deserve a place on investors’ radar:

1. Defence Sector Tailwinds

Global defense spending has surpassed US$2.5 trillion, with rising investments in modernization, drone defense, and cybersecurity. Both HighCom and Titomic are direct beneficiaries of this trend.

2. High Innovation

Innovation is at the heart of both businesses.

1. HighCom leads in ballistic armor and counter-drone systems.
2. Titomic is pioneering additive manufacturing technologies with defense-grade applications.

3. U.S. Market Expansion

Both companies are scaling operations in the U.S., the largest defense market globally. This provides access to larger contracts, greater visibility, and potential partnerships with major defense contractors.

4. Improving Financials

Even though both firms are early in their growth journeys, they are showing consistent revenue growth and operational improvements. The move toward profitability seems well within reach as their order pipelines expand.

5. Undervalued Penny Stocks

At their current market caps, both HighCom and Titomic remain undervalued compared to their technology potential and industry relevance. For investors with higher risk tolerance, they offer significant upside if execution continues as planned.

Conclusion: Niche Technology Leaders in Defence

In an increasingly unpredictable world, defense technology is no longer just about size—it’s about innovation and adaptability. HighCom Limited and Titomic Limited exemplify this shift.

Both companies are carving out strong positions in their respective niches—HighCom with protective and counter-drone systems, and Titomic with next-generation manufacturing solutions. As geopolitical tensions remain elevated and defense spending accelerates, these small but ambitious players are poised to benefit from powerful global trends.

For investors seeking exposure to the defense sector without paying premium valuations for large contractors, HighCom and Titomic represent two ASX-listed penny stocks worth watching closely in 2025–26.

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