From identifying military targets in Ukraine to mapping out routes for vehicle navigational systems, drones have become enmeshed with critical services as technologies have evolved.
While several drone stocks have started 2023 off in low aerial mode, their long-term outlook is trending skyward.
[Sign up for stock news with our Invested newsletter.]
That’s no hyperbole, as global shipments of enterprise drones, or unmanned aerial vehicles (UAVs) sold for business operations, could increase at a compound annual growth rate of 66.8% in 2023, reaching 2.4 million, according to Insider Intelligence. The drone services market as a whole is expected to hit $63.6 billion by 2025.
If you’re looking for some liftoff in your investment portfolio, take a closer look at these top drone stocks for 2023:
| Stock | Year-to-date return as of March 15 |
| Parrot SA (ticker: PAOTF) | Flat |
| EHang Holdings Ltd. (EH) | 4.3% |
| Kratos Defense & Security Solutions Inc. (KTOS) | 24.2% |
| AeroVironment Inc. (AVAV) | 6.2% |
| Boeing Co. (BA) | 4.1% |
| Joby Aviation Inc. (JOBY) | 13.1% |
| Northrop Grumman Corp. (NOC) | -17.4% |
| S&P 500 | 1.4% |
Parrot SA (PAOTF)
Founded in 1994, Paris-based Parrot SA is a professional drone and software services firm that provides products and services all over the world. The company’s stock is flat so far this year as of March 15, although younger companies in the drone marketplace like Parrot tend to produce more share price volatility.
Though the company has had a bumpy ride of late, Parrot is growing. In the past the lion’s share of Parrot’s revenues has come from the consumer segment, but the company is making inroads into the military and professional markets via its ANAFI USA drone that’s designed for first responders and enterprise professionals. For full-year 2022, sales of Parrot’s microdrones were up 88% and represented 55% of revenues.
The stock is priced at $4.50 as of March 15, but as Parrot continues to expand in the burgeoning global drone marketplace, look for that share price to stabilize and expand.
EHang Holdings Ltd. (EH)
If you believe in flying-car technology, then kick some tires on China-based EHang. The company builds autonomous aerial vehicles (AAVs), and it is inching ever closer to passing regulatory muster after 30,000 trial flights and beginning commercial operations later in 2023.
EHang recently partnered with Qingdao West Coast New Area, a Chinese government group, for a fresh $10 million round of funding. The company is expected to use the cash for basic working capital and is in line for another $10 million in funds later in the year, according to the terms of the partnership contract.
The stock is selling at $8.95 per share as of March 15, up 4.3% year to date after reports of imminent regulatory approval by the Chinese government. Three U.S. airlines have already invested in the air-taxi company.
[SEE: 7 Best Water Stocks and ETFs to Buy.]
Kratos Defense & Security Solutions Inc. (KTOS)
San Diego-based Kratos has seen its share price pop by 8% in the last month as of March 15, mostly due to news that the company has earned a $49.6 million U.S. Department of Defense initial contract for 55 of Kratos’ BQM-177A Subsonic Aerial Target systems.
KTOS is rated an analyst consensus “strong buy” on TipRanks, with a price target of $16.20, about 26% higher than its current share price of $12.82 as of March 15. RBC Capital analyst Kenneth Herbert, for example, is calling a target price of $15, and Canaccord Genuity recently upgraded Kratos to a “buy” with a $14 price target.
AeroVironment Inc. (AVAV)
This Arlington, Virginia-based military contractor’s stock is up 6.2% year to date, to $90.94 as of March 15. AVAV is drawing interest from analysts, with Robert W. Baird’s Peter Arment setting a price target of $95, and TipRanks analysts pegging AVAV at an average of $107.50.
Company CEO Wahid Nawabi recently noted the ongoing war between Russia and Ukraine is adding to demand for his company’s products. “As our solutions continue to play an essential role in Ukraine’s defense, we expect to capitalize on opportunities directly related to this conflict, while simultaneously helping the U.S. and its allies prepare for the future,” he said on a March 6 earnings call.
[SEE: 7 Top Gene-Editing Stocks to Buy.]
Boeing Co. (BA)
This aerospace giant is in a mild slump of late, with its share price down 8.8% over the past month as of March 15. But don’t let a temporary slip fool you, especially when it comes to drone technology. Boeing’s drone subsidiary division, Insitu, is coming on strong in early 2023. Its air reconnaissance ScanEagle aircraft and its Boeing MQ-25 Stingray, which recently refueled a U.S. Navy aircraft in midair — an industry first — are generating interest.
On March 6, Jefferies LLC aerospace analyst Sheila Kahyaoglu called for a price target of $250 on BA stock (it’s trading at $198.21 per share as of March 15). Robert W. Baird also issued a “buy” rating on BA with a $250 price target in a March 1 research report.
Joby Aviation Inc. (JOBY)
Joby, a rising passenger-carrying, electric-powered aviation vehicle manufacturer, has also hit a speed bump of late. On March 7, Deutsche Bank analyst Edison Yu advised shareholders to sell the stock, noting “there are important risks being overlooked by the market, and Joby’s premium valuation is too lopsided.” Yet Yu is only one of six aerospace analysts tracked by FactSet that’s currently bearish on JOBY.
In its favor, the company continues to set the pace in the flying-taxi sector, a lucrative new market. On Feb. 23, Joby reported that it is a step ahead of the competition in getting its electric vertical takeoff and landing aircraft, or eVTOLs, certified by U.S. federal regulators, adding that “it’s the first eVTOL manufacturer to start final assembly of a company-conforming aircraft.”
Northrop Grumman Corp. (NOC)
Northrop Grumman’s shares got a serious shave in January after Goldman Sachs’ bearish comments citing congressional Republicans’ bent toward curbing defense spending in 2023. Still, Northrop is stacking cash, as evidenced by its fourth-quarter numbers. Adjusted earnings skyrocketed 25% over the prior-year quarter, to $7.50 per share, as sales jumped 16% to more than $10 billion.
The Virginia-based military industrial firm is also penetrating the drone technology market with its emerging fleet of autonomous HALE (high altitude, long endurance) systems, which are in full development mode. “Today, autonomous HALE systems operate across the globe, with greater than 24-hour endurance, collecting essential air defense data over land and sea to enable rapid, informed decision-making,” the company stated.
Northrop also kicks in a decent $1.73 quarterly dividend for shareholders.
More from U.S. News
7 Best Stocks to Buy Now With $1,000
Bill Gates Portfolio: 7 Best Stocks to Buy Now
7 Best Long-Term ETFs to Buy and Hold
7 Drone Stocks to Watch for 2023 originally appeared on usnews.com
Update 03/16/23: This story was previously published at an earlier date and has been updated with new information.
