Stocks: Iraq Crisis, Need for Combat Drones May Boost AeroVironment
The stock could trade into the low $40s.
I haven't written about AeroVironment (NASDAQ:AVAV) in some time, but in my view, this is the best drone name for military applications.
A company profile on Reuters has this description:
Unmanned Aircraft Systems
The Company's small UAS, including Raven, Wasp and Puma, are designed to provide valuable ISR, including real-time tactical reconnaissance, tracking, combat assessment and geographic data, directly to the small tactical unit or individual warfighter, thereby increasing flexibility in mission planning and execution.
If that doesn't describe what the US army will likely be using a lot more of in the coming years, I don't know what does.
I typically don't like playing news driven-type names (e.g., buying a defense contractor because the US might enter another conflict). I much prefer to buy names I like when they are at the best values -- before catalysts and before the early turn technical setup, much like Twitter (NYSE:TWTR), Splunk (NASDAQ:SPLK), FireEye (NASDAQ:FEYE), and others have been demonstrating in recent days and weeks.
What I do like about AeroVironment is that it didn't spike yesterday. In fact, I thought it would have been up 5% if not more due to the conflict in Iraq. Thus, the name is catching my attention. So far, I've resisted the urge to buy the stock, but I may put a stake in the ground.
Bottom line: If the US does start sending drones for support missions, I think it will be hard to keep AeroVironment from moving into the low $40s if not higher.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter