Every so often a new, emerging industry creates a buzz that has investors clamoring for opportunities to get on board for a ride to the top. Unmanned aerial vehicles (UAVs), or drones, were introduced by the U.S. military, dazzling the world with feats of high-altitude surveillance and precision weaponry. Across the globe, consumers are flocking to electronics and hobby stores for their own personal drones.
The technology has become so advanced that nearly anyone can fly a drone, which makes them much more popular than the traditional radio-controlled aerial vehicles. Data from Statista shows that the drone market could reach $13 billion USD by 2025. Further, research and development for drones is projected to reach $3.8 billion globally by 2020 and revenue from drones is expected to be $2.4 billion.
There is a wide range of uses for drones and new developments and announcements are regularly helping to increase their profitability from both a business and shareholder perspective. The Federal Aviation Administration (FAA) is the regulating body for use of drones and has several regulations in place including the registration of the unmanned aircraft. Companies are vying to use drones for surveying, surveillance, aerial photography, crop management, deliveries and more. Thus, there are a wide variety of corporations that are associated both directly and indirectly with drones. UAV Coach keeps an updated list of the top 100 companies in the drone industry and below we discuss the top-performing U.S. publicly traded companies from the Reality Shares Drone Index.
The companies below were chosen based on one-year performance as of October 22, 2018. Investors seeking to invest in a diversified portfolio of drone stocks can also look to the ETFMG Drone Economy Strategy ETF (IFLY).
AeroVironment Inc (AVAV)
AeroVironment is focused on the manufacturing and supply of aircraft systems for UAVs and missiles to government agencies. The company is also involved in supply for electric vehicles. It has two main business segments: unmanned aircraft systems and efficient energy systems.
AVAV has a one-year stock return of 68%. Its stock trades at $92. The company has $314 million in trailing twelve-month revenue with one-year revenue growth of 18%. Net income is $4 million with a one-year growth rate of 61%. The company has one of the highest net margins among its peer group at 17. Valuation ratios for the company include a P/E of 47, a P/S of 7 and a P/CF of 46.
Sony Corp ADR (SNE)
Sony manufactures drones primarily with cameras for retail sales. The company is also in the business of commercial drone manufacturing.
Sony trades as an ADR on the NYSE. Its one-year return is 52%. It trades at a price of $56. The company has a one-year revenue of $76 billion for the trailing twelve months with a 12% one-year revenue growth rate. Net income is $932 million with a one-year growth rate of 570%.
Heico Corp (HEI)
Heico is in the business of manufacturing aircraft and jet engine components. In 2017 the company acquired AeroAntenna Technology and Interface Displays & Controls which has been helping to fuel growth.
Heico trades at $85 on the NYSE. It has a one-year return of 47%. The company has a one-year revenue of $1.7 billion with a one-year revenue growth rate of 11%. The company’s one-year net income is reported at $110 million. Net income has been growing at a one-year growth rate of 110% with a three annualized net income growth rate of 15%.
The Bottom Line
Drone stocks and companies affiliated with drone production and supply provide one channel for investors looking for emerging growth. Other noteworthy names in the drone market also include Ambarella Inc., GoPro, Boeing, Teledyne, and Nvidia. For the one-year period through October 22, 2018, the IFLY ETF has a one-year return of -1.32% with broader exposure to more drone companies globally.