Drone Delivery Stocks to Buy Now in the Name of Revolution
Global drone delivery revenue is expected to be a $67 billion market opportunity by 2025 and to jump four-fold to $275 billion by 2030. The theme could change everything from delivery to personal transportation and NOW is the time to start investing in the stocks that will make it happen. In this video, I’ll share the research behind drone delivery stocks and then reveal the five to watch right now!
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Drone Delivery Promises Huge Growth
Nation, ecommerce jumped 32% last year to more than 21% of total retail sales, cramming years of online shopping growth into one…but as fast as ecommerce is growing, delivery time and costs are still holding it back.
Delivery costs add between ten- and 20% onto the price of ecommerce purchases with the time to deliver sometimes adding days. It can cost $30 or more to FedEx a five pound package just ten miles and that’s for next-day delivery. Sending that same package same-day by bike courier can cost $125.
But drone delivery is about to change both how much you pay and the time it takes to deliver everything from groceries, the chia pet Gremlin you got your mom and even delivering your butt into the city for work.
Drone delivery has reduced the cost to send a five pound package through Amazon Prime to almost nothing and requiring less time than bike messenger. It could deliver pharmaceuticals in under 10 minutes and at a fraction the cost of mail delivery or driving yourself.
That data is from the Ark Invest Big Ideas report, a 112-page research report from Cathie Wood and the team at Ark Funds on the 15 life-changing trends they’re following.
So over the next few months, I’m going to dig deep into these 15 disruptive trends, show you that research, help you analyze it and then reveal the top stocks to buy in each!
I’ll be putting these videos into a special playlist on the channel called Ark Invest Stocks to Buy. Make sure you join the community so you don’t miss any of those videos because these are going to be the stocks you want to be in over the next decade!
Now drone deliveries are basically nil right now but ARK estimates could account for 13% of retail sales by 2025 for $15 billion in annual revenue. That’s the purple section of the bar here showing global ecommerce share of retail. More than that, the market is expected to grow at a 50% annual pace to $115 billion by 2030…that’s a seven-fold increase in annual revenues for companies in the space.
Drone Delivery Eyes Billions of Dollars in Revenue
And that’s just retail sales. ARK estimates that drone delivery platforms could bring in nearly $50 billion in annual revenue by 2024 and $274 billion by 2030 across parcel, food delivery and air taxis. Hardware sales are expected at over $13 billion over the next few years and to reach $49 billion by 2030.
So this is a huge opportunity, for companies to go from virtually nothing in revenue now on these commercial drones to a market of nearly $300 billion in less than a decade. And a lot of it is being driven by improvements in battery technology. Lower battery costs and autonomous tech are coming together to drive this revolution. The cost of a 10-mile autonomous drone delivery is now just $0.25 versus $7.80 for a remotely piloted drone.
Florida is already building the first US passenger drone vertiport with plans to operate it by 2025 and drones are going to change the way we think about transportation.
How to Invest in Drone Delivery Stocks
Now I want to get to those five drone stocks I’m watching and show you how to find them but I also want to throw this out to the community. We’re more than halfway through our Big Ideas series, eight videos of the 15 biggest investing trends and I want to know, which trend do you think will produce the highest returns over the next decade? From digital wallets to AI and virtual reality, which of these life-changing themes do you think make for the best investments? So scroll down and let us know in the comments, which big ideas theme are you following for the highest returns?
I’ll be using the Stockcard.io platform to research the stocks and I love the platform for being able to see a lot of the ratios and analysis we use here on the channel, all grouped together in easy to understand sections for growth potential, operations, share performance and valuation.
I’ll leave a link to Stockcard in the video description below. Don’t forget to click through and follow the 2021 Bow Tie Nation portfolio, up 32% already and beating the market by 25% this year.
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Top 5 Drone Delivery Stocks to Buy
Now working through our list of drone delivery stocks, understand that unlike some of our other big trends, this one is still very much in the pre-revenue stage so we want to invest in companies across the supply chain as well as the beneficiaries to the technology. So if we’re investing in companies like delivery services, hardware, mapping and software; we can better diversify across the theme and have a better chance at finding that one stock that’s going to 10X our money on the trend.
Our first drone stock here, Kratos Defense, ticker KTOS, and this is one we’ve highlighted in a few of these big ideas videos.
The shares are already up 11% from our space stocks video last month and the company is involved in a lot of these trends we’re watching.
Honestly, when you look at all the tech and capabilities this company has from unmanned drone systems to space management, missile defense and microwave devices…Kratos is the tip of the spear in warfighting tech and while it’s not a pure-play commercial drone company, defense is where the drone trend started and I think these companies could play a role in the commercial development.
Kratos has been developing avionics and control systems for unmanned drones for over 40 years. It has the mapping technology, the tracking and a lot of the other tech that needs to go into these things.
The company is one of the strongest on the list for earnings with profits expected at $0.36 a share this year and 56% growth to $0.55 per share next on 15% sales growth to $957 million. That puts it at just 3.5-times on a forward price to sales basis. Ark is already a big investor here with $145 million in shares in its ARKQ Autonomous Tech and Robotics ETF and added it as the third largest position in the new ARKX Space Exploration ETF with another $26 million investment.
Our next stock to watch, AeroVironment, ticker AVAV, has more commercial drone exposure but also 50 years of experience in the defense market. The company developed the rotor, propulsion system, structure and landing gear for the Mars Helicopter, the first aircraft to fly on another world.
On the commercial side, AeroVironment has the Quantix mapper to gather imagery and assess terrain along with a unmanned helicopter product. The company recently announced it’s acquiring Arcturus UAV to expand its reach into the $1 billion annual group 2 and 3 segments, a deal expected to close in the fourth quarter of this year.
The company has $368 million in balance sheet cash, more than 10% of the market cap, and no debt. Sales grew at 17% last fiscal year and here we see revenue growth increased last quarter to a 27% annual pace, so lots of financial flexibility and those long-term government contracts mean it’s going to be around to lead the theme.
Ambarella, ticker AMBA, is another company I think could benefit from several of the big investing trends we’re following.
Ambarella makes a processor with artificial intelligence specifically designed for video applications, enabling 3D imaging and 4K resolution. The company is developing the advanced algorithms in this that could enable smart drones.
It’s mostly targeting the automotive space and other robotics applications but is developing drone applications as well. It’s estimating a $7 billion addressable market by 2026 across auto, Internet of Things and other robotics.
The opportunity in automotive alone is much bigger with the number of cameras and that processing need expected to jump from 1.5 cameras on current models to as many as 20 for self-driving capabilities.
The company has already announced seven customers in the drone space along with 17 in automotive and 30 in security cameras. Sales were down slightly by 9% in the last year but still reported at $223 million and the company has over $441 million in balance sheet cash with no debt. Management is expecting 10% revenue growth this year and as much as 25% growth in 2022.
EHang Holdings, ticker EH, is a pure-play autonomous aerial taxi company and the smallest stock on our list.
The company completed its first trial flights over the Sea of China in February and is partnering with Giancarlo Zema to build a vertiport in Italy.
This is still very much a startup-stage, pre-revenue company and it has come under short-seller attack lately but refuted the allegations by showing details of its sales contracts. It’s one of the only drone stocks in the air taxi space but years from a scalable business, so just keep this one on your radar.
And maybe my favorite play in the drone stock space, Amazon, ticker AMZN, with its prime air delivery.
Annual shipping costs through Amazon surged last year to $61 billion, up 60% from 2019, and while customers pay a lot of those…it’s still a cost that if it can be reduced could increase how much people buy and the fees Amazon collects.
The company made its first Prime Air delivery in 2016 and is expecting to deliver packages up to five pounds in 30 minutes or less with the service. That’s up to about 86% of the packages the company delivers meaning this could be a huge change to Amazon’s cost structure in the next few years.
Now of course, Amazon isn’t a pure-play in the drone stocks theme so won’t see the shares rally as much when the technology becomes commercially feasible and scalable but the company has a lot of other investments in the big trends we’re following and a lock on ecommerce.
As you can see, delivery drones are the future. Which delivery drone stocks are you buying to get ahead of this investing trend?
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