Promising growth sectors are hard to come by these days, but drones are shaping up to be such an industry. Barely in existence 15 years ago, drones are becoming more important in the US military, and across an increasing number of commercial enterprises. For more growing stock picks you need to invest in a trading alert system such as the one mentioned in our Timothy Sykes review.
Earlier this year, the release of a drone model called the DJI Phantom 3 lowered the tech barrier and many industries have begun integrating the technology.
Consumer drone retailer Drones Etc., along with many other retailers are now offering this model. It has also been rumored big box stores may carry drones this Christmas shopping season.
They are far less expensive to own and operate than manned aircraft, and they can go where manned aircraft can’t. Those two factors alone make it a highly promising industry to invest in.
Where are the best opportunities to invest in drone technology right now?
There are some mixed plays – since the industry is still in its infancy – but there are a number of companies that are poised to become leaders in the field.
Here are ten such companies.
1. GoPro
The company that gave us wearable video cameras is also developing it’s own line of drones for consumer use. The company plans to sell airborne drone cameras to ordinary citizens. It seems like a natural development given the company’s current core camera business.
The company hasn’t provided many specifics in regard to the drone camera itself, but it’s easy to imagine the potential applications. They could have use in photography (think aerial shots of weddings and other special events), use in shopping for new homes to buy or even neighborhoods to move to. And what about use as a last minute courier service for small businesses? The possibilities are unlimited, and GoPro has the name recognition – and the technology link – to make it all work profitably.
2. InvenSense (INVN)
Though not a direct provider of drones, InvenSense does provide an important technology that drones require – micro-electro-mechanical system gyroscopes for motion tracking devices. These are already in use in smartphones and tablets, as well as drones.
As the size of the drone market grows, the need for gyroscopes will increase in step. InvenSense hopes to capture a large share of that market, which should insure a bright future for this company.
3. Google (GOOGL)
Google is another example of an indirect play on drones, since drones are not a part of the company’s core business, and may never be. Google has acquired a series of robotics companies, and last year they acquired Titan Aerospace. Titan makes drones that can fly up to the edge of the earth’s atmosphere – 65,000 feet – and remain in flight for up to three years. These drones will be part of Google’s “Project Loon”, which is an ambitious program designed to bring the internet to the most remote corners of the globe.
It’s not hard to imagine that this will also have a positive impact on Google Maps, enabling the application to get more and better images of the entire earth’s surface, even areas considered too remote to be reached by more conventional methods.
The Titan drones are about the size of jets, and rely on solar energy for their power, which is why they can stay in flight for so long. They could give Google a global reach that no other competitor can match.
4. Lockheed Martin (LMT)
The military industrial complex is the most logical source for plays on drone technology, at least up to this point. The military is the first sector to make large scale use of drones, and to develop and expand the technology. Lockheed Martin in one of several defense contractors that is on the cutting edge of that technology, and it is expected that military applications for drones will only expand in the future.
The US military is already using a giant unmanned balloon hovering over Afghanistan that was made by Lockheed Martin. It enables the Pentagon to watch the goings on in that troubled country on a continuous basis.
Lockheed Marin also makes other military drones, including the K-MAX, which is an unmanned cargo helicopter. As the military requires more drones for more missions, Lockheed Martin will fill the void, putting it on top of the latest in drone technology.
5. Boeing (BA)
Boeing gets nearly 20% of it’s revenues from military sales, and at least part of that is from drones. As a major supplier of hardware to the military, its role in this capacity is assured in the future.
The company’s Phantom Eye can match the Titan drone in altitude at 65,000 feet, though it can only stay airborne for four days. Still, it provides an ongoing flow of intelligence and communications, which can be of value in both military and commercial ventures. The company is also developing a series of other drones that are showing promise.
6. Ambarella (AMBA)
Ambarella is yet another play on drones from a non-drone maker. But the company makes something invaluable for drones – chipsets and software that record and transmit high definition videos. Its chips incorporate HD videos and images, as well as audio in a single component.
This company has actually been around for a while, so it isn’t anything close to a start-up, having been founded in 2004. The company’s technology is already in widespread use in TV broadcasting, and their compression chips are involved in a large amount of TV programming around the world. Its components are already operating to drive the latest generation of high definition security cameras.
7. Skycatch
Skycatch provides small drones that are used by clients to capture data for property owners enabling them to keep track of large areas. The drones fly over the property, then use sensors to collect information and return the information to ground operators. The company hasn’t gone public yet, but when it does, it will be well worth a close look. The company started two years ago by selling drones to commercial clients like construction and energy firms, including Chevron and Komatsu.
Japan based construction equipment manufacturer Komatsu Ltd plans to use drones to deal with a shortage of construction workers in Japan. The drones will work with driverless bulldozers to completely automate construction projects. Komatsu plans to lease at least 200 drones from Skycatch, and Skycatch management is hoping to provide drones for thousands of construction sites around the world. Some drones have already been used to assist with the clean up from the Nepal earthquake.
8. Amazon (AMZN)
As one of the largest delivery operations in existence, drones are a natural development for Amazon. They plan to use drones to deliver packages to their online customers, sometimes in as little as 30 minutes. They refer to it as their “Octocopter” program. They plan to have a fleet of Amazon Prime Air helicopter drones delivering packages, and expect that they’ll become as commonplace as mail trucks or delivery services like UPS.
The company is still testing the program and it may be several years before they can roll it out on a large scale basis. As well, the delivery drones will need to obtain FAA approval, which is still something of an X factor. If and when the program goes through, Amazon will once again be on the cutting edge of a massive industry change, in which modes of delivery will change, and customer fulfillment will be close to instantaneous.
It’s not even inconceivable that Amazon could expand the drone delivery service to other retailers, radically changing the entire nature of the delivery service business.
9. Northrop Grumman (NOC)
Yet another major defense contractor that already has an inside track on drones and the technology that drives them. The company provided it’s Global Hawk – an unmanned aerial drone that can track enemy activity at an altitude of more than 60,000 feet – to the US military after the 9/11 attacks. The company continues to provide drones to the military for a variety of other roles.
The company is one of the largest US defense contractors, with annual revenues in the billions. Drones comprise just a small percentage of that revenue at present, but it’s virtually assured to grow as military applications for drones are only likely to increase in the future.
10. IXYS Corp. (IXYS)
IXYS Corp doesn’t manufacture drones, but it does provide the power controllers and power chipsets that are used in drones. In fact, one of the most important aspects of power in regard to drones is that they need to generate it as efficiently as possible in order for the drones to be economical. As a supplier to the drone industry for critical components, the future for this company looks bright indeed.
The company has been showing solid revenue growth, which should continue as demand increases from both industrial power and communications.
Final Thought
That’s ten stocks to get you started. But drones are a new technology that is changing continuously, so keep an eye out for new investment opportunities as they arise.
Buyouts of small, independent drone companies may represent the best opportunities available, as large companies buy up the little guys.
Mainstream news paints a grim picture of privacy concerns and haywire drones falling out of the air. While skeptics make up their minds, expert analysts have forecasted The Billion Dollar Drone Industry with implications into every market on Earth. Industries all over the world are quickly integrating drone technology: Firefighting, insurance, inspection, real estate and others are jumping into this tech.
Is their a mutual fund that has these companies above in it or some of them or do you recommend individual stocks. I’ve never invested in stock and am not sure where to begin
I’m not aware of any mutual funds that’ve been created to track the UAS industry. However, there is a newly created ETF under the ticker ‘IFLY’ that has a well rounded portfolio dedicated solely to companies involved in just about every aspect of the UAV industry. That’s the best and only option that I know of at the moment. If you’re looking for a single stock that’s most closely involved in the actual production of UAV’s then I’d check out AeroVironment (AVAV). That would be your best long term investment in this industry, in my opinion. Though, I wouldn’t buy it just yet.
So when do you suggest buying AVAV, and why?
Drones are not a generally interesting sector to create an ETF or a fund for, nor invest in. Your best bet would be to go with the real drone makers such as LMT and the like. With an ultra ambitious war monger occupying the WH, you can be sure that the military industrial complex will do just fine.
If you have confidence in the drone industry itself, buy the individual stock most directly correlated to drones for the best upside potential. Some of these companies are so diversified, they’ re like owning a mutual fund. If their stock price does go up, you’d have no idea, really, if the appreciation was from drones or some other aspect of their enterprise. Safer, probably but maybe not the industry in which you intended to invest. Homework, homework,homework. Buying stock is easy. Buying the right stock and having a profitable selling point is a little more challenging. I’m sure you’ll do fine.
Tip of the hat to you.
what about drone usa “drus” a small lil interesting company their accuring a lot of little companys???????
I bought DRUS a few weeks ago and have been watching it closely. They are in the acquisition phase as Chad mentioned, so it will be a hold on and wait situation with this stock.
It is not a Drone Maker but operates as a diversified gold, mineral, and rock mining company
I would purchase the ETF way, this way you’re covered no matter what happens to the individual drone stocks. In other words if an acquisition does ever occur, then the ETF will reposition it’s holdings to maintain it.
Alta Vista Ventures (UAV) is a pure play in the drone industry. They do traditional drone work but they are the only company that specializes in the mining industry.. They have real revenues which are growing very quickly . they have had to add more equipment to keep up with demand.. A very cheap stock and unknown
Good Day,
Please let me know the price, if you have something in
stock that matches or is close to what I have specified
below:
The Inspire 2 Premium Combo from DJI bundles the Inspire
2 professional quadcopter with the Zenmuse X5S gimbal
camera with Micro 4/3 sensor.
Hope to read or hear from you soon as you find some
feedback.
Best Regards.
Frank Frabert
I wish this article actually answered the question. Many corporations will one day be using drones.
Apparently nobody is going to make them for these companies, – interesting