3 Drone Stocks That Could Soar as the Technology Continues to Advance
As we navigate into a new era of technological innovation, the market for drone stocks is rapidly expanding. These stocks represent businesses effectively integrating drones into our daily lives, with use cases across multiple industries, including aerial photography, environmental monitoring and emergency response, among others.
Additionally, the advent of 5G technology marks a critical moment for drone capabilities, offering higher speed, reduced latency and improved reliability. This leap in connectivity paves the way for new possibilities, positioning drone stocks as tantalizing prospects for investors.
Moreover, the drone market is on an impressive ascent, projected to grow from $35.28 billion in 2024 to $67.64 billion by 2029, showcasing a stellar annual growth rate of 13.9%. This surge mirrors drones’ growing integration across multiple societal and industrial sectors. Yet, in a marketplace bustling with contenders, savvy investors recognize that not every drone stock is equally promising. With that said, here are three top-performing drone stocks, each with the potential to soar as the technology advances.
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AeroVironment (AVAV)
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AeroVironment (NASDAQ:AVAV) is one of the top players in the unmanned aerial vehicle (UAV) fueled by innovation and pivotal Department of Defense (DoD) contracts. Its innovative edge is shown by the recent debut of the PS2500 battery, extending its Puma 3 AE’s flight time to three hours. The Puma 3 AE is AVAV’s advanced reconnaissance drone, which has garnered orders worth millions from various public and private entities.
Moreover, AVAV clinched a $2.67 million deal with the Department of Defense, delivering advanced Tomahawk robotic controller prototypes to manage multiple drones. This achievement, paired with the successful test of GPS-guided Shryke munitions (precision-guided weapons) from the all-electric VAPOR 55 MX UAS, marks a significant stride in military drone innovation.
Furthermore, AVAV’s financial health shines, boasting a 36.8% year-over-year (YoY) surge in sales to $186.58 million in the third-quarter (Q3). Moreover, its earnings per share (EPS) of 63 cents exceeded forecasts by 29 cents. Consequently, the stock has been lauded by TipRanks analysts, assigning a ‘strong buy’ rating with a 7.6% upside potential.
Kratos Defense & Security Solutions (KTOS)
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Kratos Defense & Security Solutions (NASDAQ:KTOS) stands out in the defense sector, securing a notable 40.5% surge in stock price over the past year. The company’s pivotal $579 million contract to enhance Space Force’s satellite command-and-control systems has been a major catalyst for the firm. Moreover, the showcase of tactical and target unmanned jet drones, set to triple in production to 160 drones annually, underscores its role in military and national security capabilities.
Further amplifying its market position, Kratos has bagged around $50 million in awards for products and hardware to counter unmanned aerial systems (CUAS), air defense and radar systems. These contracts testify to Kratos’s prowess in crafting key systems for contemporary warfare and defense strategies.
Financially, KTOS reported a 9.8% YoY increase in revenue in its fourth-quarter (Q4), reaching $273.8 million. EPS also exceeded expectations, hitting 12 cents and outpacing forecasts by four cents. Subsequently, with TipRanks analysts giving KTOS a ‘moderate buy’ rating with a 27.5% upside potential, it emerges as a compelling investment choice.
Northrop Grumman (NOC)
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Northrop Grumman (NYSE:NOC), a leading force in aerospace and defense technology, continues to redefine military drone capabilities. With its stock price climbing 8.2% over the past six months, NOC’s innovative drones, such as Firebird, demonstrate unmatched flexibility for diverse mission demands, solidifying its position in the defense space.
Moreover, NOC’s efforts to adapt two RQ-4 Global Hawk drones for monitoring hypersonic system tests demonstrate its forward-thinking approach and readiness to meet future challenges. Additionally, the development of the RQ-180 drone marks a leap in surveillance technology, enhancing the firm’s aerospace and defense profile. The US Air Force believes this drone can safely overfly enemy areas to collect crucial imagery and pinpoint enemy sensors.
Furthermore, NOC’s revenue increase of 6% YoY in its latest quarter, with EPS surpassing expectations by 47 cents, underscores its solid market position. Quant analysts’ ‘buy’ rating further reflects confidence in NOC’s growth trajectory, signaling an attractive future.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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