Cash In on the Coming Drone Wars

By Susan J. Aluise, Aviation, Auto & Transportation Writer

As unmanned aerial vehicles go commercial, money will be made

Bottom Line: The coming drone wars create two opportunities for investors. First, despite gloom and doom forecasts for small-cap defense/aerospace stocks facing the fiscal cliff, I think AeroVironment could be a bargain buy for investors now.

AVAV shares slumped about 10% since it reported a wider-than-expected loss and slower drone sales in September. But AeroVironment’s forecast for the full fiscal year ending in April beat expectations. I like AVAV in 2013. It doesn’t hurt that the company also develops electric vehicle charging stations — it has deployed 10,000 of them in North America so far.

Second, I think drone commercialization presents an attractive revenue stream for mega-cap defense/aerospace contractors. Fiscal cliff or no, defense cuts are a fact of life for companies like LMT, NOC, RTN, TXT and BA. Developing new growth will be at least as important as cost-cutting as these companies strive to deliver shareholder value in a down defense market.

And keep an eye out for more acquisitions like Lockheed Martin’s Chandler/May deal as commercial drones begin to take off in a big way.

While the FAA still has to iron out safety and national security issues before vast flocks of drones start zipping around your rooftop, investors in the right UAV stocks stand to gain big when the drone market soars.

http://investorplace.com/2012/11/cash-in-on-the-coming-drone-wars/