War Babies

DEFINITION of 'War Babies'

A name given to securities in companies that are defense contractors. These securities are called war babies because they are viewed as securities of firms that produce the majority of their revenues from war-time circumstances, including firms that operate in security and defense sectors. Also known as "defense stocks."


An example of securities from firms that would be described as war babies are companies that build aircrafts and ammunition. When a war is imminent, these stocks tend to outperform the market because of the potential for increased business and national defense contracts and revenues.