Sometimes everything just aligns perfectly for a stock. That's exactly what's happening with Red Cat Holdings Inc. (RCAT), a robotics and drone solutions provider that's become the poster child for how quickly defense stocks can move when the political winds shift in their favor.

President Donald Trump's announcement to bump the military budget from $900 billion to $1.5 trillion has defense contractors practically doing backflips. Red Cat is up 41.70% year-to-date, and we're barely a week into the new year. That's the kind of rally that gets people's attention.

When Momentum Meets Opportunity

Here's where it gets interesting. Red Cat's momentum score has rocketed from 13.59 to 74.77 in just seven days. For context, momentum scores measure a stock's relative strength by analyzing price movements and volatility across different timeframes, then ranking each stock as a percentile against the entire market. Going from the bottom 14th percentile to the top 25th percentile in a week is, well, unusual.

The rally started when the Federal Communications Commission decided to ban Chinese drone manufacturers DJI and Autel. Suddenly, domestic drone makers like Red Cat, Ondas Holdings Inc. (ONDS), and AeroVironment Inc. (AVAV) found themselves with significantly less competition in the U.S. market. That's the kind of regulatory gift that defense contractors dream about.

Then came Trump's defense budget announcement. Then came the Venezuela operation that resulted in the capture of President Nicolás Maduro. Then tensions with Iran started heating up again. It's like someone stacked every possible catalyst for defense stocks into one condensed week.

The Perfect Storm for Defense

Red Cat has benefited from all these tailwinds simultaneously. The stock now scores high on momentum metrics, showing favorable price trends across short, medium, and long-term timeframes. When you've got regulatory protection from foreign competitors, a massive proposed budget increase, and fresh geopolitical tensions all hitting at once, you get the kind of momentum that pushes stocks into new territory.

For investors watching the defense sector, Red Cat's trajectory illustrates how quickly these stocks can move when macro factors converge. The question now is whether this momentum can sustain itself once the initial excitement settles, or if we're watching a classic case of everything good happening at once before reality sets back in.