Drones – How to Cash In on Drone Stocks

Facebook’s interest in drone maker Titan shows UAVs are more than hot air

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Drones – How to Cash In on Drone Stocks

What do Mark Zuckerberg, Defense Secretary Chuck Hagel and a U.K. Domino’s (DPZ) franchise owner have in common? Innovative ideas for using unmanned aerial vehicles (UAVs), commonly known as drones. With myriad new commercial and military applications, drones might be one of the coolest, highest-potential tech markets around for investors. The next big thing is here: drone stocks.

amazon drone 150x150 Drones   How to Cash In on Drone StocksZuckerberg’s Facebook (FB) raised the ante in the commercial drone war this week with news of a deal to buy UAV manufacturer Titan Aerospace for $60 million. Titan’s solar-powered UAVs — which can stay airborne for five years at an altitude of 65,000 feet — potentially could enable FB to cost-effectively extend the reach of the Internet and mobile services to underserved rural regions around the globe.

Facebook’s move into drones clearly illustrates the game-changing potential of the technology. But other examples abound, showing how some tech stocks are moving toward becoming drone stocks:

  • Leaner Pentagon spending has had an impact on DoD’s drone plans. Instead of keeping the iconic U-2 spy plane for high-altitude reconnaissance, the Air Force instead is looking to retire the fleet, replacing it with Northrop Grumman’s (NOC) upgraded Global Hawk drones.
  • Amazon (AMZN) founder Jeff Bezos rocked the UAV world last December with his announcement that the e-commerce giant was testing package delivery via drone. The “Prime Air” concept, Bezos told CBS’ 60 Minutes, would dispatch small drones known as “octocopters” to deliver small packages to customers within 30 minutes.
  • A Domino’s franchise in the UK tested drone delivery of pizzas last summer. But don’t expect to see the so-called “DomiCopter” to show up in U.S. skies anytime soon.
  • Last May, Google’s (GOOG) venture capital unit invested $10.7 million in Airware, a company that builds development platforms — autopilots — for UAVs. It’s not GOOG’s first foray into the drone sector, either: Back in 2010, the tech giant reportedly tested a battery-powered surveillance drone manufactured by Germany’s Microdrones GmbH.
  • In China, drones will soon be an important part of the government’s “War on Smog”. The government reportedly will deploy UAVs with flexible parasails that are capable of spraying chemicals that freeze atmospheric pollutants and cause them to fall to the ground. The drones can reportedly carry more than 1,500 pounds of the chemicals .

The biggest near-term headwind for commercial drones taking to the air en masse is the Federal Aviation Administration (FAA), which is in charge of U.S. airspace. The FAA needs to make sure that thousands of drones flitting about without flight plans would not pose a hazard for aircraft.

And make no mistake, the FAA takes its job seriously: It recently grounded Wisconsin brewery Lakemaid’s beer-delivery-by-drone plans after the company posted a YouTube video of a delivery to ice fishermen.


Article printed from InvestorPlace Media, http://investorplace.com/2014/03/drones-drone-stocks-avav/.

©2014 InvestorPlace Media, LLC

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