Believe It or Not, Drones Will Change the Civilian World for the Better

Spying and warfare are normally the first thing that come to mind when you think about drones, but work being done by drone in the civilian realm shows that there's an entirely different side to these technological marvels.

Apr 20, 2014 at 1:40PM

Drones represent an incredible technological advance that is coming out of the military industrial complex. But don't let the military image fool you -- the now ubiquitous GPS got its foothold in military applications, too. If you want proof that drones will assimilate into our daily lives, look no further than the energy industry.

A military device
Boeing (NYSE:BA) is a giant aviation company, with about 40% of its business tied to military sales. On that side, it makes the Phantom Eye. Boeing's Phantom Eye is a high altitude drone powered by liquid hydrogen. It can fly for up to four days carrying a 450 pound load. What might such a tool be used for? OK, let's be honest -- the best use is spying and, perhaps, blowing things up.

But that's just one side of the drone world. For example, Northrop Grumman (NYSE:NOC) recently watched as its X-47B unmanned aircraft landed itself on an aircraft carrier. This could be a big step toward computers taking greater control over our lives or a great wartime advance. After all, if a jet can take off, land, and fight without a human, Northrop Grumman just made war a whole lot safer. But, it could also be a way for remote and dangerous locations to receive supplies without the need to risk human life.

X

(Source: U.S. Navy/Northrop Grumman/Kelly Schindler, via Wikimedia Commons)

Where might that be? Perhaps in the frozen seas off of the coast of Alaska where the Kulluk drill ship ran aground last year. Imagine Boeing's Phantom Eye giving human managers an eagle eye view while Northrop's X-47B makes deliveries. And how about the K-MAX unmanned helicopter taking up to three tons of those supplies and delivering them to even more remote drill sites?

While drone sales like this probably won't move the needle at Boeing, which earned a record $86.6 billion in revenue last year, or at Northrop, which had nearly $25 billion in sales, they would help to diversify both companies away from the military. And the cost for this expansion would be virtually nothing, since the knowledge and expertise was built up on the government's dime. Moreover, as the government is getting more picky about its spending, such a shift would be particularly timely. For example, revenues in Northrop's Aerospace Systems segment fell 7% in the fourth quarter, partly because of weakness in its drone business.

The utility side
If supplying remote drill sites seems fanciful to you, how about considering something more mundane? Like inspecting utility boilers, towers, and electric power lines. Those are awful and dangerous jobs for humans, but not for drones. Private United Aerobotics is already offering drones for such chores; the going rate is around $5,000 a day.

Nano

(Source: DARPA, via Wikimedia Commons)

Now consider the Hummingbird drone from AeroVironment (NASDAQ:AVAV). This little wonder is literally the size of a small bird and can hover. AeroVironment's tiny little drone could easily be used to spy on people. Or, it could be used to inspect the duct work in a giant building or the inner workings of a factory. United Aerobotics is basically doing this kind of work right now.

U.S. military sales make up about 70% of AeroVironment's top line. But its drone expertise could easily be used in non-military applications. In fact, the company specifically hopes to "create opportunities beyond the military market." Getting more civilian orders would also help smooth out the top line, since military sales are driven by large orders. For example, after rising for three consecutive years, earnings fell by more than 50% in fiscal 2013 (years end April). "Government contracting delays for unmanned aircraft systems," was a big part of the problem.

The drones of tomorrow, today
There's a lot of tension when it comes to drones. That's understandable, but drones are already providing benefits to utilities. Taking more of that military know how into the civilian space doesn't take much imagination. AeroVironment is a drone specialist, but diversified Boeing and Lockheed are also worth keeping an eye on in this emerging space.

Are you ready to profit from this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends AeroVironment. The Motley Fool owns shares of AeroVironment and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers