Jefferies is telling clients to buy European armored vehicle and ammunition makers, arguing the sector has been oversold since the Iran war began. The investment bank sees an opening after investors piled into air defense stocks, leaving traditional defense contractors out in the cold.

Shares in European tank and ammunition producers have dropped sharply as capital flowed toward missile and air defense systems. Jefferies analysts believe this rotation created a buying opportunity in companies that remain essential to modern military capabilities.

The shift reflects how quickly defense spending priorities can change during active conflicts. While air defense dominated procurement discussions, ground-based systems and ammunition supplies continue to represent critical military needs.

Jefferies' contrarian call suggests these defense stocks could rebound as investors recognize the enduring demand for armored vehicles and munitions in ongoing geopolitical tensions.