by Fred Fuld III
“Total global shipments to reach 2.4 million in 2023 – increasing at a 66.8% compound annual growth rate. The drone services market size is expected to grow to $63.6 billion by 2025.” ~ Source: Insider Intelligence, April 15, 2022
The drone industry has tremendous potential for growth in the coming years, and is expected to become an increasingly important part of various businesses and industries. Here are a few areas where the drone industry is likely to see significant growth in the future:
- Aerial Photography and Videography: Drones are being increasingly used for aerial photography and videography, especially in the real estate, advertising, and film industries. With advancements in technology, drones are becoming more capable of capturing high-quality footage and are becoming more affordable, making them accessible to a wider range of businesses and consumers.
- Agriculture: Drones are being used in the agricultural industry for a variety of purposes, including crop monitoring, yield analysis, and soil mapping. With the help of drones, farmers can better manage their crops and optimize their yields, which can lead to increased efficiency and profitability.
- Infrastructure Inspection: Drones can be used to inspect infrastructure such as bridges, power lines, and pipelines, which can be dangerous and difficult for humans to access. With the help of drones, inspections can be carried out more quickly, safely, and cost-effectively, which can lead to improved maintenance and safety.
- Delivery Services: Drones can be used for delivery services, especially in areas where ground transportation is difficult or expensive. With the development of autonomous drone technology, it may become possible to deliver packages and other items more quickly and efficiently than traditional delivery methods.
- Search and Rescue: Drones can be used in search and rescue operations to locate missing persons or to survey areas that are difficult to access. With the help of drones, rescue teams can more quickly and accurately locate and assess the situation, which can lead to more successful outcomes.
Overall, the drone industry has significant potential for growth in a variety of areas, and is likely to become an increasingly important part of many businesses and industries in the future.
If you are looking for pure plays or semi-pure plays in the drone industry, there are a few to choose from:
•AeroVironment (AVAV)
•Kratos Defense & Security Solutions (KTOS)
•EHang Holdings Ltd. (EH)
•Ambarella (AMBA)
•Joby Aviation Inc. (JOBY)
AeroVironment produces unmanned aircraft systems selling largely to the U.S. Government and international governments.
The company has had consistent and steady revenues, and sports a forward price to earnings ratio of 37. Long term annual estimated earnings growth for the next five years is 18.2%.
Kratos provides unmanned aerial systems, and unmanned ground and seaborne systems to the U.S. Department of Defense.
The stock trades at 26 time forward earnings and quarterly revenue growth year over year is 7.8%. Current earnings are negative.
Ambarella would be considered more of a semi-play as it makes video chips for high quality drones. The stock has a forward P/E ratio of 142. The company is debt free with $5.12 in cash per share.
Joby Aviation is developing an aerial ride sharing service. The market cap is $2.6 billion and earnings are negative.
EHang Holdings produces autonomous aerial vehicles in China. It is extremely low cap at $660 million.
Possibly one of these stocks will fly high with the drones.
Disclosure: Author didn’t own any of the above at the time the article was written.