Although military drones dominate the news, we are only an arm’s length away from unmanned aerial taxis. And the agricultural drone market is predicted to explode in less than half a decade. But the real question is: where are the drone stocks ?
Investment in drones is worth considering due to its potential for growth. Business analyst firm Insider Intelligence estimates that the global drone market, valued at $30.6 billion at the end of 2020, could have a compound annual growth rate (CAGR) of 66.8 percent this year.
The commercial drone market is predicted to have a CAGR of 8.3 percent through 2030, potentially reaching a value of $55.8 billion by the end of the decade. The agricultural drone market is forecast to have a CAGR of 31.5 percent between 2022 and 2028, while the energy sector could see annual demand growth of more than 10 percent.
Additionally, the military drone market is expected to reach $17 billion by 2029, with a projected CAGR of 7.3 percent in the following years. As a result, when building a portfolio at the beginning of the year, it is worth considering which stocks to invest in to take advantage of the drone industry’s growth. Parrot shares have risen 17 percent in the past 3 months. Retrieved from originally a hobby drone company,
Paris-based company has been manufacturing units for commercial drone manufacturers since 2018. Specialising in 3D mapping, surveying and inspection, Parrot’s finances are robust. Its third-quarter performance last year skyrocketed, with consolidated revenues up 229 percent year-on-year, while newer businesses posted 72 percent revenue growth in the first half of 2022. Interestingly, CEO Henri Seydoux is the largest shareholder with 63 percent. That is management is crying and laughing with shareholders.
Chinese EHang’s shares have rallied 19.2 percent in the last 3 months. Analysts say performance could improve further as China opens. Although third-quarter revenue fell 44 percent, the market expects EHang’s 216 drones to be commercialized later this year. The appointment of Chinese entrepreneurial legend Nick Ning Yang as CEO will improve the company’s image.
Shares of San Diego-based Kratos are trading at $10.60, but Truist Security’s Michael Ciarmoli has a 12-month target of $18 with a buy recommendation. Analysts also point out that corporate insiders’ share-buying activity continues to increase. The stock is supported by a contractual relationship with the US Department of Defense. Military drones account for a quarter of revenues.
The stock is well positioned to track the military drone market
Shares of US-based AeroVironment (AVAV) have rallied nearly 45 percent in the past year. Currently quoted near $83, the analyst consensus expects AVAV’s share price to reach $104. AVAV supplies unmanned aircraft systems to Ukraine, meaning that the investment is a way to buy shares in a company whose products are being tested in a war.
Defence giant Northrop Grumman’s stock is also a laggard in the military drone market. The company develops long-life systems designed for high-altitude flight, specifically for intelligence, surveillance, reconnaissance and fire control. In October last year, a $79 million contract was signed to supply the US with 28 GQM-163 Coyote supersonic drones, developed for use against maritime targets. Despite the volatility in the industry, NOC shares are outperforming.
Drone manufacturing is not yet the core business of the Boeing giant, but its subsidiary Insitu builds unmanned aircraft systems. Such as Boeing’s MQ-25 Stingray flying tanker, which performs aerial refueling of military aircraft. But the 28 per cent rise in BA’s share price over the past six months can be attributed mainly to its classic aircraft business.
Working on perhaps the most speculative scenario by California-based Joby Aviation, which is developing passenger drones.
Analysts say there is a gap in the market for commercial electric-powered aircraft, such as transporting commuters on short regional routes. Surprisingly, there is a huge race for this market. With competitors such as the Archer and the Lilium. Joby’s bird is backed by decades of development experience and thousands of successful test flights. Aviation industry analysts have an average 12-month target price of $6.62 per share, with a price target of $3.97.