The stock market was volatile on Thursday, but by early afternoon, most major indexes had turned positive. The Nasdaq Composite (^IXIC -0.64%) climbed by about a quarter-percent as of 12:30 p.m. ET after having spent much of the morning in negative territory.
It's easy to think of the Nasdaq as having primarily technology companies, and it's true that many of the largest companies in the Nasdaq-100 Index are indeed tied to tech. However, a couple of stocks that made solid gains on Thursday are worth a closer look. Below, we'll examine unmanned aerial vehicle specialist AeroVironment (AVAV -1.49%) and oil and gas producer Diamondback Energy (FANG 0.91%) to see what's pushing their shares higher.
AeroVironment flies higher
Shares of AeroVironment were up more than 14% early Thursday afternoon. Investors got more interested in the stock as they realized some of the tactical capabilities that the drone maker's products could bring to level the playing field in the war between Russia and Ukraine.
President Joe Biden announced Wednesday that the U.S. would provide $800 million in assistance to Ukraine, which will include materiel ranging from ammunition and body armor to antiaircraft systems and grenade launchers. Included in the packages were 100 tactical unmanned aerial systems, and reports determined that these would likely be the Switchblade 300 and 600 models produced by AeroVironment. The stock rose slightly late Wednesday following the White House announcement, but today's gains seemed to reflect the likelihood of an extended conflict between Ukraine and Russia.
The news could finally bring some much-needed growth for AeroVironment. Revenue has grown at an annual rate of just 13% between fiscal 2018 and fiscal 2021, but sales of high-value Switchblades could provide a nice boost to that figure for fiscal 2022.
AeroVironment is just one of many defense-related stocks that have risen sharply since the invasion began. With the possibility of a longer-term cooling of geopolitical relations around the world, investors are seeing the value of diversifying into a sector with a history of solid performance.
Image source: Getty Images.
Diamondback looks energetic
Meanwhile, shares of Diamondback Energy were up more than 5% on Thursday. The move came on a good day for the oil and gas markets, with West Texas Intermediate crude pushing higher by $7 to climb above $102 per barrel.
Diamondback has been a huge beneficiary of higher oil prices for more than a year now. Revenue in 2021 soared more than 140% year over year to $6.8 billion, and Diamondback reversed a massive loss in 2020 by posting net income of $2.18 billion. The oil and gas producer offers investors some leverage on oil prices, as the company has more than $6 billion in net debt against a book value of roughly $12 billion.
Recently, Diamondback has maintained a disciplined approach, keeping production steady and enjoying the rising price environment. That has helped it reduce debt enough to earn an investment-grade bond rating, which should help it pay less in interest as it works to strengthen its balance sheet further.
Looking ahead, Diamondback hopes to restructure debt and return capital to shareholders. If oil prices stay high, though, it'll be interesting to see whether it decides to look for opportunities to expand its operations as well.
