Invest in the Drone Boom With These Four Stocks
As drone interest takes off, these investments could join the ride
When investment mavens drone on, it’s easy to tune them out. But when investment mavens talk drones, there’s every reason to listen up. Quadrocopters, ocean robots and the like represent a new wave of high-tech that you could well call high-flying tech — as much for the potential altitude of stock prices as the aircraft themselves.
To gain some perspective on where drone stocks might be headed, it pays to study the metrics behind their growing popularity.
Between 2015 and 2016, sales of drones more than tripled to about $200 million, according to Fortune. That figure embraces a wide variety of drones — used for photography, racing and even search and rescue — and doesn’t even take into account machines meant for military use. What next? Fortune predicts: “Uses for drones are expected to get even more diverse, with the machines being developed for farming and even snack delivery.” And when you think about it, getting your Oreos dropped off by a drone is way cooler than plunking change into a vending machine.
So don’t fly off before checking out our take on five drone stocks to watch, beginning with a well-known giant of American aviation.
If the enthusiasm over drones somehow turns to crash and burn, it’s nice to at least have an investment that doubles as a bet in flight the old-fashioned way. Chicago-based Boeing is known, of course, for its commercial jets and thus isn’t a pure play in the drone sector.
But it does have a substantial presence there through two subsidiaries: Insitu (a maker of medium-sized military drones, known as unmanned aircraft systems) and Liquid Robotics (maker of the Wave Glider ocean surface robot). Boeing purchased the St. Louis-based Liquid Robotics in December for an undisclosed sum.
For high-tech geeks, the Wave Glider is a bit of sci-fi come to life. It floats on the ocean surface and collects data, propelling itself for up to a year using wave and solar power. The Los Angeles Times also reports that there’s a military-grade version called SHARC (Sensor Hosting Autonomous Remote Craft). Meanwhile, Boeing has spent the last year on an uninterrupted climb, up 52 percent to just under $200 per share. With a healthy market capitalization if $118 billion and some smart investments on the non-consumer side of the drone market, Boeing stands poised to cultivate its brand new drone ventures to make some good old-fashioned profit.
Parrot SA (PARRO)
There are two ways to look at an investment in this French company: Either get in now while the price is really low, or sit things out to see whether the company takes flight again. Twice Parrot has enjoyed huge vertical flights up, only to crash land. After going public in 2006 at about 24 euros, it doubled a year later — and was down 18 months after that by more than 92 percent, to less than 4 euros. The cycle was nearly repeated between 2014 and 2016, when Parrot went from 15 euros to just shy of 50 euros, and back down again to 12.50.
Today it stands even lower, at 9.50 euros, but a dozen shares might not be a bad bet. The website Nanlayze has called Parrot “one drone stock to invest in,” and in 2016, Parrot unveiled the Disco FPV, billed as the world’s first smart flying fixed wing drone. The FPV reaches speeds up to 50 m.p.h. and includes an “immersive flying” headset, which puts the user in the cockpit. For Summer 2017, Parrot cut the price from $1,299 to $799 and should overall drone demand surge in the next few years, Parrot can at least claim an edge as it’s been in the game since 2010, a long time by high-tech standards.
It wasn’t all that long ago — 2013, to be exact — when Amazon.com began making a lot of noise about Amazon Prime Air. The service, so the e-commerce giant predicted, might someday get a package to your door within 30 minutes, via octocopter.
But for all the hype, and predictions that “CopterZon,” if you will, would launch by 2015, it simply didn’t happen — unless you count this sunscreen delivery via drone at an Amazon-hosted conference in March. Rest assured, head Amazonian Jeff Bezos has far from given up his quest for drone-driven commerce. The very recent purchase of Whole Foods has revived the drone talk, which could be used in warehouses even as robots will be used to update the Whole Foods inventory system. What’s more, “The loading docks at Whole Foods could eventually become airports for drones” delivering groceries, the Washington Post reports. Amazon may be behind in its drone ambitions, but give that the stock refuses to slump — it’s up a third over the last year to $968 — the chances it will come through are strong. (Meanwhile, pranksters are already gearing up for the day when they can send a dozen Amazon deliveries to your door at once, and launch a mini-drone squadron in the process.)
If you believe in the Warren Buffett maxim that the best time to buy a company with potential is when it’s “on the operating table,” well step into the ER and say hello to GoPro. It’s hard to believe that as recently as October 2014, GoPro was riding a 143 percent jump from its IPO price of just four months previous. But from that peak of $87 per share, the bottom fell out, and GoPro trades at a hair above $8, which is more than 90 percent off its high water mark. Oh why consider GoPro at all? First of all, the stock has nowhere to go at this point but up; you can buy 100 shares for less than the cost of one Amazon share, and should it recover even half the price it hit in 2014, you’d be looking at roughly $40,000 made on an $800 investment. GoPro’s new play in the drone market, Karma, had an embarrassing launch in Fall 2016 after the first units lost power and crashed. But the Karma drones have been re-released — retailing in the pricey neighborhood of $1,100 apiece — and the upcoming second-quarter report will reveal whether Karma has given GoPro’s bottom line some much-needed altitude.