3 Drone Stocks to Buy Now

You've probably heard of drones by now, and technically speaking, it's a type of unmanned aerial vehicle (UAV), meaning a drone is an aircraft that flies by itself with no pilot or passengers.

Drones have been used for years by the U.S. military, but are now just starting to be utilized commercially for consumers. E-commerce giant Amazon AMZN is testing drones to deliver packages, fast-casual restaurant company Chipotle CMGwants to use drones to deliver its burritos, hobbyists can purchase GoPro's GPRO Karma drone to achieve "Hollywood-caliber footage," and that's just the tip of the iceberg.

The drone industry is rapidly changing, and investors have taken notice. With this in mind, check out these three drone technology stocks that show promise in this burgeoning industry.

STMicroelectronics NV STM

STMicroelectronics is a global semiconductor company that designs, develops, manufactures, and markets a broad range of semiconductor integrated circuits and discrete devices used in a wide variety of applications. Currently, Swiss-based STMicroelectronics is known for its chip research for 3-D printing and "Internet of Things" operations, but it also is exploring chips for drones.

STMicro is a #2 (Buy) on the Zacks Rank, with a VGM score of 'A.' Its earnings growth estimates, however, are insane. For the current quarter, STM expects year-over-year earnings growth of over 760%, with one upward revision compared to none lower. STMicro is also in a strong industry, Semiconductor-General , which sits in the top 10% out of all industries ranked on the Zacks Industry Rank.

Lockheed Martin LMT

One of the biggest aerospace and defense giants today, Lockheed Martin is already responsible for many of the drones used by the U.S. military, and it continues to put its drone business front and center. Lockheed is also looking to begin manufacturing armed drones, which could be a big boon to its bottom line, especially if the Department of Defense continues to support the sale and use of them internationally.

Lockheed Martin currently holds a #2 (Buy) on the Zacks Rank, with a VGM score of 'C.' Its industry, Aerospace-Defense , rests in the top 30% of all industries ranked on the Zacks Industry Rank, and this could improve if President Trump's defense budget gets approved. Lockheed has posted an earnings beat for the past four consecutive quarters, and has an average surprise of 12.41%. For the current quarter, the company expects year-over-year earnings growth of 5.43%.

AeroVironment AVAV

Despite its #3 (Hold) on the Zacks Rank, AeroVironment is probably the purest play option for those looking to invest in drones, apart from rival DJI, which is still a privately-held company. AeroVironment is a profitable, small-cap company that has both military and civilian clients, and its Raven drone model is the most widely-used small-scale drone in the world.

AVAV stock, however, does have a volatile history, but some of its earnings growth does look promising. For the current quarter, AeroVironment expects year-over-year earnings growth of about 330% and year-over-year sales growth of roughly 44%, and has an average earnings surprise of 73.68%. If investors want a pure play drone option, AeroVironment is their best bet, but it's risky a one, so stay cautious.

Bottom Line

Like all new technologies, drones are continuously changing, and new investment opportunities will likely arise as the technology evolves. Don't be surprised if other tech giants like Alphabet GOOGL beef up their drone offerings, following in Amazon's footsteps. But if you're looking to add drone stocks to your portfolio today, the list above is a good place to start.

For more information on the drone industry, check out a special episode of the Zacks Friday Finish Line, where Content Writer Ryan McQueeney and Editor Maddy Johnson were joined by Andrew Chanin, the CEO of PureFunds, to discuss the PureFunds Drone Economy Stretegy ETF IFLY , the first ETF to focus on the emerging commercial drone market.

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Alphabet Inc. (GOOGL): Free Stock Analysis Report

Lockheed Martin Corporation (LMT): Free Stock Analysis Report

AeroVironment, Inc. (AVAV): Free Stock Analysis Report

PF-DRONETECH (IFLY): ETF Research Reports

GoPro, Inc. (GPRO): Free Stock Analysis Report

Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report

STMicroelectronics N.V. (STM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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