A few weeks back, an unknown burglar broke into my younger daughter Kendall’s apartment while she was sleeping in her bedroom.
I sure wish that she could have had the new security drone camera from smart-home firm Ring.
It’s set up to fly for security sweeps and then dock itself when not needed. As a dad who is a security freak, this sounds very appealing to me.
Unfortunately, the device won’t be available until early next year.
That said, it still shows you just how fast drone technology is moving in a market growing at 20.5% a year and headed to a value of $43 billion by 2024.
We’re seeing drones used for deliveries of goods and medical supplies, corporate and national security surveillance, and tactical deployments for soldiers.
Today, I want to show you a great pure play on the market.
It just made a key merger that deepens the product line and is on a path to double earnings in 3.5 years…
The High-Tech Skies
As someone who has followed this field for many years, I have to say I’m very impressed with how things are starting to gel for this industry.
Fact is, users are continuing to find new innovations and tactics.
In China, volunteer search and rescue-group Blue Sky Rescue outfitted a drone with a gasoline tank and a nozzle, turning it into a flying flamethrower for eradicating the wasp nests that endanger rescue workers.
California’s largest utility company, PG&E Corp. (PCG), now uses drones with high-resolution cameras to inspect its transmission lines, distribution poles, attached equipment, and the land around them.
The photos are then analyzed by machine learning software to quickly figure out what needs to be repaired or replaced.
In the past, it took hours upon hours to have everything manually inspected. And as the devastating 2018 Camp Fire caused by faulty PG&E equipment shows, even that wasn’t always enough.
And in the Southern California city of Chula Vista, the local police department now uses a self-flying drone to provide rapid-response video overview to officers responding to emergency calls.
Because it’s a small drone, not a full-sized helicopter, it can move quickly, uses less fuel, and doesn’t draw attention. It also flies itself to and from the scene, cutting down on costs.
And it keeps track of suspects and any evidence they may try to get rid of, improving the effectiveness of police.
These are just three of the many revolutionary uses that drones are being put to right now.
In other words, a pure-play on the drone market faces a lot of upsides.
A Visionary Acquisition
AeroVironment Inc. (AVAV) is that pure play, and the leader in both military and commercial drones.
In fact, AeroVironment is the Pentagon’s largest supplier of drones, including the small Raven.
Coming in at just 4.2 pounds and with a wingspan of 4.5 feet, the Raven is so small and light that U.S. warfighters can easily carry it and launch the unmanned aircraft in remote places.
But despite its small size, the Raven can fly itself using built-in AI. It also provides 360° vision in both visible light and infrared, nighttime surveillance, and secure communications in rugged terrain.
On the commercial side, AeroVironment makes drones and software packages to help farmers monitor the health of crops, stores to deliver packages by drone, wireless companies to replace cellphone towers with high-altitude drones, and firms and governments to map and survey land.
Now, when we talk of “drones,” most people think of the flying ones. But ground-based robots can be drones, too. From package delivery to bomb disposal, these drones on wheels can be very important.
And with its latest acquisition, AeroVironment just became one of the most important players in this market, too.
For just $54.8 million, AeroVironment is buying Germany ‘s leader in unmanned ground vehicles, a firm named Telerob Gesellschaft für Fernhantierungstechnik mbH.
Since 1994, Telerob has been making unmanned ground vehicles for all manners of defense and security applications, including, for example, bomb disposal, hazardous materials handling, in-field vehicle repair, and assessment of biological, radiological, and nuclear threats.
In these areas, drones have to be made very sturdy and robust, not to mention smart enough not to endanger humans with their dangerous and often volatile cargo.
There’s also no replacing these drones with humans. We are, quite simply, too fragile.
AeroVironment’s merger with Telerob shows how great the firm is at constantly finding new avenues for growth. It already has the U.S aerial defense drone market on lock.
Now, by acquiring Telerob, AeroVironment will be able to build on that to offer the U.S. military ground vehicles, too. The two companies have already submitted a joint proposal to the U.S. Air Force, and are planning to do the same to the Marine Corps, Navy, Air National Guard, and several U.S. police forces.
The merger also gets AeroVironment a much larger international presence. Germany ‘s Federal Ministry of Defense, for example, is looking to modernize its unmanned aerial vehicle fleet.
Telerob ‘s history in Germany gives AeroVironment a huge leg up there.
And that’s not even mentioning the 44 other countries, including America’s Middle Eastern allies, where Telerob already operates.
These successes show up in the numbers, too. In its most recent quarterly earnings report, AeroVironment’s per-share profits were up by 41%.
So, as the use of aerial and land drones grows in the years ahead so will the value of this powerful stock.
Now, while I still see huge upside ahead for this investment, subscribers to my Nova-X Report investing research newsletter had the chance to get on board months ago.
If you want to hear about opportunities like this early, along with other high-tech investments with market-crushing potential, just click here to get started.
Cheers and good investing,
Michael A. Robinson