Multisector reliance on drones keeps growing.
Drones are more popular than ever, and it’s not just hobbyists who are into unmanned aerial vehicles, or UAVs. The military increasingly relies on them, as do law enforcement, the entertainment industry, industrial agriculture and a host of other commercial enterprises. Last year, venture capital, IPO and other investors put almost $7 billion into the drone industry, up sharply from the previous all-time high of roughly $2.4 billion in 2020, according to Drone Industry Insights. If you’re an investor wanting to get in on the soaring technology, here are seven drone stocks to consider.
Boeing Co. (ticker: BA)
This big aerospace and defense company has a dedicated drone subsidiary, Insitu, which designs, develops, produces and operates unmanned aircraft systems. In addition to defense applications, the company’s technologies can also be applied to commercial uses, such as environmental monitoring, agriculture, search and rescue, disaster relief and mining operations. Its ScanEagle, QF-16 and MQ-25 aircraft “have garnered quite a response from the company’s customer base,” says Uri Gruenbaum, CEO of TipRanks, which shows an average 12-month price target among 18 analysts of $213.27. That’s quite the potential upside to June 21’s close of $136.75.
Lockheed Martin Corp. (LMT)
Analysts are also expecting this major aerospace and defense contractor to rise in price, with TipRanks showing an average price target of $504.50. That represents an $86 upside from its June 21 close of $418.96. The Air Force is developing, testing and fielding the Lockheed-built RQ-170 Sentinel, which is designed to provide reconnaissance and surveillance. With $66 billion in expected net sales this year, Lockheed isn’t a pure-play drone stock. But its sales of drone technology could grow as the military continues to look for ways to put fewer pilots in harm’s way.
Northrop Grumman Corp. (NOC)
This aerospace and defense company along with the previously mentioned contractors “are the most trusted and deep-rooted companies in the UAV industry of the United States,” Gruenbaum says. Being a part of the growth in the U.S. drone market is a plus for them, he adds, as these companies stand to benefit from strong demand from the military, surveillance, commercial and entertainment industries. “The players’ solid product offerings, technological expertise and innovative skills have earned them recognition in the UAV industry,” he says. “Also, a healthy liquidity position and easy access to other resources required in the field have given these companies a competitive edge above other players.”
AeroVironment Inc. (AVAV)
For the big aerospace and defense contractors, the size of their drone business is just a small part of their overall sales. AeroVironment, a relatively small defense contractor that also offers drones for commercial use, is a purer play. This month, the company said the U.S. Marine Corps in May awarded it a $6.2 million contract for its Puma 3 AE drones. The company claims that its small unmanned aircraft systems make up the majority of all unmanned aircraft in the Defense Department’s inventory. AeroVironment’s “rapidly growing international customer base numbers more than 50 allied governments, including the Ukraine,” the company says.
Draganfly Inc. (DPRO)
Here’s another drone company with technology that has been deployed in Ukraine. Draganfly creates drone solutions, software and artificial intelligence systems for the public safety, public health, mining, agriculture, industrial inspections, security, mapping and surveying markets. In the first quarter, the company’s sales grew by more than 32% year on year to more than $2 million. Most of that came from product sales, with the rest coming from drone services and engineering services. It greatly narrowed its net loss from $45.2 million in the first quarter of 2021 to $6.2 million during the comparable period this year.
Cytta Corp. (CYCA)
With a market cap of around $56 million, this over-the-counter stock is tiny compared with the big aerospace and defense contractors. But Peter Schultz, CEO of Wealth Builder Publishing, has been keeping an eye on this company that makes a communications platform allowing participants, such as law enforcement officers, to see the same aerial video from drones as the UAV operator does. “There are approximately 18,000 police departments in the United States, and Cytta Corp.’s technology is designed so that any police force — regardless of size or budget — can afford the platform,” Schultz says. “Their sales are ready for liftoff.” But he notes a risk is that “adoption could be undermined by technical ignorance. Not everyone understands the power of drone technology and its ability to collect previously undiscoverable data easily and cheaply.”
Drone Delivery Canada Corp. (TAKOF)
Package delivery by drone could not only be a revolutionary solution to last-mile delivery problems with internet shopping. It could also prove to be a lifeline for remote communities needing medical and other packages. Drone Delivery Canada offers software, hardware and services for cargo delivery. It’s an early-stage company, so like Cytta, it could be more risky than other more-established companies. But its business model, which includes both software and hardware, seems promising. Last month, the company said it had received a certificate from Transport Canada allowing commercial drone delivery beyond the visual line of sight of an operator. It would be a boon to the company if it can provide broader service beyond the line of sight, which has been a major limitation for the industry.
These drone stocks could be ready for liftoff:
— Boeing Co. (BA)
— Lockheed Martin Corp. (LMT)
— Northrop Grumman Corp. (NOC)
— AeroVironment Inc. (AVAV)
— Draganfly Inc. (DPRO)
— Cytta Corp. (CYCA)
— Drone Delivery Canada Corp. (TAKOF)
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Update 06/22/22: This story was published at an earlier date and has been updated with new information.