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Mysterious sightings of flying objects over New Jersey and across the eastern U.S. have captivated the nation. While some Americans have raised concerns about security and safety, alien enthusiasts speculate that our extraterrestrial friends may be visiting us.
Whether the objects are friends or foes, as savvy investors, any situation that warrants attention is an investable opportunity, And in this one, drone stocks have started buzzing.
This is for good reason. Drones can be effective pieces of monitoring equipment for the surveillance of these mysterious objects. Moreover, aside from security purposes, drones have use cases in a variety of industries. In agriculture and construction, drones monitor operations, ensure compliance, and inspect assets for damage or wear. Their deployment in disaster management helps assess damage, locate survivors, and guide relief efforts.
Drones also play a pivotal role in crowd monitoring during large-scale events, helping manage public safety by identifying disturbances or bottlenecks. Law enforcement agencies deploy drones for crime scene investigations, suspect tracking, and search-and-rescue missions.
Thus, unsurprisingly, the market size for drones is set to soar with it expected to touch $54.81 billion by 2030. These four stocks are potential ways to capture the upside of this space.
Drone Stock #1: AeroVironment
Founded in 1971, AeroVironment, Inc. (AVAV) is a leading American technology company specializing in unmanned aircraft systems (UAS) and tactical missile systems. The company's primary offerings include UAS, missile systems, uncrewed ground vehicle and a helicopter designed to explore Mars. Its market capitalization currently stands at $4.4 billion.
AVAV stock is up 25% on a year-to-date basis.
Overall, analysts have deemed the stock a “Strong Buy” with a mean target price of $225.20. This denotes upside potential of about 43% from current levels. Out of 6 analysts covering the stock, 4 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating and 1 has a “Hold” rating.
Drone Stock #2: Kratos Defense
Founded in 1994, Kratos Defense (KTOS) is a prominent American defense contractor specializing in unmanned systems, satellite communications, and cybersecurity solutions. Its market cap is currently at $3.85 billion.
KTOS stock has gained 25% on a YTD basis.
Meanwhile, analysts remain cautiously optimistic about the stock, giving it a rating of “Moderate Buy” with a mean target price of $27.27 which denotes an upside potential of about 6% from current levels. Out of 12 analysts covering the stock, 6 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating and 5 have a “Hold” rating.
Drone Stock #3: Red Cat Holdings
Founded in 1984 as Oravest International, Red Cat Holdings (RCAT) is a drone technology company specializing in the integration of robotic hardware and software for military, government, and commercial applications. Its focus lies on UAS, military and government contracts and commercial operations including surveillance and data collection.
Valued at a market cap of $729.7 million, RCAT has been a multi-bagger this year, gaining 878% on a YTD basis. A recent partnership with defense tech company Palantir (PLTR) further propelled the stock to higher levels.
With just one analyst covering it, Red Cat has been deemed a “Strong Buy” with a mean target price of $15 which denotes an upside potential of about 68% from current levels.
Drone Stock #4: Unusual Machines
Unusual Machines (UMAC) was founded fairly recently in 2019. It is a technology company specializing in drone solutions, particularly first-person view (FPV) systems for drone pilots. The company designs, manufactures, and sells ultra-low latency video goggles for drone pilots. It also operates a drone-focused e-commerce marketplace, serving drone pilots, hobbyists, and recreational users. Its market cap is currently at $96 million.
Meanwhile, UMAC stock has rallied 250% on a YTD basis. The strong showing in the stock can also be attributed to Donald Trump Jr., the son of President-elect Donald Trump, joining its advisory board.
Only one analyst covers the stock and has deemed it a “Strong Buy” with a mean target price of $4 that has already been surpassed.
