In March 2023, I sent a recommendation out to members of my investment service, Secret Stock Files.
It was for drone-maker AeroVironment (NYSE: AVAV), which was trading around $84 at the time.
Well, after racking up a monster 30% gain on Tuesday, the stock has since climbed above $180 per share.
That means we've about doubled our money in just 12 months.
There's more to come, too, and I'll tell you why…
First and foremost, unmanned systems aren't just the future of combat — they're the present.
They've been the biggest difference-maker in Ukraine's effort to stave off Russia's invasion.
Cheap and easy to produce, they've helped level the playing field for a country that's outmanned and outgunned by its much larger opponent.
The commander of one Ukrainian drone outfit estimates that with just $700,000 of drones, his unit has destroyed more than $80 million worth of Russian equipment.
Unsurprisingly, AeroVironment's drones are among those being deployed.
Its Switchblade loitering munition has been especially effective.
It's small, it's lightweight, and it can be deployed in under two minutes. Once launched into the air, it can perform reconnaissance with its HD camera, helping its operator to zero in on a target, and then crash down on it in a kamikaze-style attack.
The drone has been such an asset, and its performance in live combat situations in Ukraine so convincing, that every country in the world is now racing to add them to their arsenal.
As AeroVironment CEO Wahid Nawabi put it, Ukraine "woke up a lot of customers to say, 'You have to have this. This is not an option anymore.'"
In light of that, the State Department has recently permitted the company to sell the Switchblade to 20 U.S. allies and partners — many of which have already placed orders.
AeroVironment makes a raft of other drones as well — all equally effective and in suddenly high demand.
Indeed, these are some of the hottest products on the market in a world where defense spending has soared to more than $2 trillion.
NATO alone is set to spend more than $1 trillion on defense this year.
And going forward, unmanned systems are poised to play an even larger role in combat.
That's what I mean when I say they're the present and the future.
More and more, we're seeing drones take to the sky, sea, and land to complement battle groups of every stripe.
They're being used for recon, targeting, hauling, and, ultimately, destruction.
Earlier this week, Ukrainian forces used a seaborne drone to sink a Russian patrol boat that cost $65 million to make and was just launched in 2021.
That's why drone companies are faring so well.
It's amid this backdrop that AeroVironment achieved the following in its most recent quarter:
- A 91% increase in quarterly EPS ($0.63 per share).
- A 39% increase in revenue (a record $186.6 million).
- A 48% increase in gross margin ($67.3 million).
- A 210% increase in operating income ($14.3 million).
- Net income of $13.9 million, or $0.50 per diluted share, compared with a net loss of $700,000, or $0.03 per diluted share, last year.
- And a funded backlog of $462.8 million — a 9% increase from last year.
And even with all that, the company is still eyeing growth — and substantial growth, at that.
"With the increased global demand for our solutions, strong backlog, and growing pipeline, AeroVironment remains well positioned for continued growth," Nawabi said.
That bodes well for my subscribers who have already doubled their money, but it could work out for you too.
That's because I have another drone stock in my portfolio that's poised to deliver similar gains.
It's currently up about 20% with a lot more room to run.
So be sure to check that out here if you really want to profit.
Fight on,
Jason Simpkins
Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more...
In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor's page.
Be sure to visit our Angel Investment Research channel on YouTube and tune into Jason's podcasts.
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