Who Will Build America's Next Super Drone Fighter?

Defense contracting giant Lockheed Martin (NYSE: LMT  ) builds both of the world's most powerful combat fighter jets, the F-22 Raptor and the F-35 Lightning II. But in the race to build unmanned aircraft, Lockheed has been a bit of a laggard.

Rival contractors Boeing (NYSE: BA  ) , Textron (NYSE: TXT  ) , and Northrop Grumman (NYSE: NOC  ) have enjoyed great success with their ScanEagle, Shadow, and Global Hawk drone aircraft, respectively. Yet, Lockheed to date hasn't developed a single unmanned aerial vehicle, or UAV, that has won significant sales success with the military. Rather, Lockheed's main claim to fame in the drone space has been its RQ-170 Sentinel  -- and that aircraft is most famous for getting hacked and captured by Iran!

But all that could soon change following a recent announcement from Lockheed.

Lockheed, meet AeroVironment. AeroVironment... Lockheed.
On Thursday, Lockheed announced it had signed a "memorandum of understanding" with one of the leading players in the UAV space. AeroVironment (NASDAQ: AVAV  ) is the company behind such well-known small UAVs as the Raven and Puma. It's also the company that developed the popular Switchblade guided-missile/UAV hybrid, as well as the Nano Hummingbird -- a small, aerodynamic UAV shaped like a real hummingbird.


AeroVironment Nano Hummingbird. Source: AeroVironment.

Initially, the companies say they will team up so that Lockheed can assist AeroVironment with its one sizable UAV, the high-altitude, long-endurance Global Observer drone. Farther out, though, the companies don't rule out jointly pursuing other projects in the UAV space.


AeroVironment's huge Global Observer at dawn. Photo: AeroVironment.

What it means to you
For shareholders of AeroVironment, this is big news -- and a big reason why AeroVironment shares rose 8% in the two days following Lockheed's announcement. As a small defense contractor with barely $210 million in annual revenue, AeroVironment is highly sensitive to small blips in defense spending patterns. Already, cuts in Pentagon budgeting have analysts, quoted on Yahoo! Finance, taking down the company's projected growth rate from 20% just a few months ago to just 14% today. A tie-up with a larger, more stable defense contractor like Lockheed Martin could be a real boon to AeroVironment.

On the other side of the coin, by joining forces with a recognized success story in the field of flying robots, Lockheed bolsters its own deficient exposure to the UAV sector. Farther down the road, Lockheed Martin could conceivably decide to buy AeroVironment -- with its $660 million market cap, it would be a small meal for Lockheed -- and give its own single-digit-growth rate a nice boost in the process.


AeroVironment's Switchblade could give Lockheed's growth rate a a shot in the arm. Photo: AeroVironment.

Psst! America has a secret weapon
Fighter jets are pretty neat. And drones are neater still. But what's the coolest weapons system of all? U.S. News and World Report says America has a secret weapon that "will drive the U.S. economy." Business Insider calls it "the growth force of our time." And in a special report titled "America's $2.89 Trillion Super Weapon Revealed," we'll tell you all about it -- and explain how to capitalize on this massive growth opportunity. Act now, because this is your shot to cash in before the fat cats on Wall Street beat you to the potentially life-changing profits. Click here now for instant access to this free report.


Read/Post Comments (2) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 12, 2014, at 4:37 AM, LaryB wrote:

    Who will build America's next super drone? Probably the Chinese. They have stolen almost everything else.

  • Report this Comment On February 12, 2014, at 12:40 PM, Hecklrkosh wrote:

    The next Super fighter? You guys haven't figured out what's wrong with the F35 yet, and that plane cost, how much???

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2831401, ~/Articles/ArticleHandler.aspx, 11/24/2014 9:24:12 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement