September 21st, 2026 | 07:10 CEST
Defence Spending Boom: BAE Systems, Volatus Aerospace and AeroVironment in Focus
Governments worldwide have approved major increases in defence spending. This applies particularly to NATO members, but also to other Western allies. Despite its high debt levels, the US remains the most attractive market. Alongside conventional defence systems, however, new technologies are increasingly coming into focus, including drone warfare as well as systems designed to defend against drone attacks. Today, we take a look at the stocks of BAE Systems, Volatus Aerospace and AeroVironment.
time to read: 4 minutes
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Author:
Tarik Dede
ISIN:
VOLATUS AEROSPACE INC | CA92865M1023 | TSXV: FLT , OTCQB: TAKOF , AEROVIRONMENT DL -_0001 | US0080731088 , BAE SYSTEMS PLC LS-_025 | GB0002634946
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Author
Tarik Dede
Even as a high school student in northern Germany, he developed a strong interest in the “Neuer Markt” and the dynamics of the equity markets. Small- and mid-cap companies were at the center of his focus from the very beginning. After completing his training as a certified bank clerk, he deepened his economic expertise through formal studies in economics as well as through various positions within Frankfurt’s financial sector. Today, he has been actively involved in the capital markets for more than 25 years, both professionally and as a private investor.
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BAE Systems: New Orders Drive Share Price Gains
BAE Systems stock is bringing shareholders good fortune—or rather, share price gains. Since the end of 2021 alone, the British company's share price has roughly quadrupled. It rose from a low of EUR 6.25 to just under EUR 24 currently. The wars in Eastern Europe and the Persian Gulf likely contributed to this development. This year, however, the stock has shown unusual volatility. It experienced sharp declines and rallies in two waves.
Recently, however, buying activity has picked up again. One reason may have been a major contract from the US Army. The US Department of Defense has awarded the British company a contract for the serial production, maintenance, and further development of the AMPV vehicle family. This contract involves fully armoured tracked vehicles intended to replace the US Army's ageing M113 fleet. Specifically, it covers personnel carriers, medical vehicles, command posts, and mortar carriers. The contract is valued at USD 818.35 million. The contract is part of a specific framework agreement for BAE Systems worth just under USD 3.3 billion. The order also serves as a job creation measure by the US government. As a result, capacity utilization and production lines at BAE's US division in Pennsylvania will be secured through May 31, 2030.
Overall, BAE Systems is feeling the effects of global rearmament very clearly. The company has a record order backlog of more than 84 billion pounds, which promises years of revenue and dividends for shareholders.
Volatus Aerospace: Strong Recovery
Volatus Aerospace is gaining momentum again. The Canadian drone manufacturer's stock had been trading around the CAD 0.50 mark for weeks, hitting a 12-month low. But strong second-quarter results and new orders are now driving the stock higher again.
The latest order, in particular, highlights the company's potential. The company announced that it had received a government contract. Specifically, the Canadian Department of National Defence awarded a 5-year contract to deliver tactical unmanned reconnaissance systems, known as ISR drones. The Canadian Armed Forces are the customers. The initial order comprises a total of 100 drone systems. Canada also has the option to order up to 4,900 additional systems, bringing the total volume to up to 5,000 systems. The request for proposals itself specified a maximum price of CAD 5,000 per system and a maximum budget of CAD 25 million. However, the exact contractually agreed-upon pricing structure from Volatus Aerospace remains confidential. In addition to the aircraft, Volatus also stands out with its service offerings. The contract includes sensors, ground control stations, data links, maintenance, spare parts, software support, and user training. The first tranche of deliveries is scheduled to begin as early as the fourth quarter.
For Volatus Aerospace, this marks the first successful conversion of a pre-qualification from Canada's Defence Drone Initiative (DDI) into a concrete procurement contract. The news provided the stock with a significant boost. It is now trading 20% higher than a few weeks ago, though its market capitalization remains modest at around CAD 435 million. Overall, the company has a sales pipeline totaling approximately CAD 500 million.
Volatus is also in the Phase II evaluation phase of the US Drone Dominance Program for long-range platforms. In addition, orders from European NATO countries could come in over the course of the year. Financially, the company increased revenue by 49.5% to CAD 8.4 million in the second quarter compared to the first quarter. The gross margin reached a solid 29%. The stock is suitable for investors who want to bet on the future of drones in both the civilian and military sectors.
AeroVironment: Major Order Boosts Stock
The US company AeroVironment has also recently scored a success with new orders. The Arlington-based company, near Washington, D.C., announced a contract from the US Army worth USD 464.8 million. It is the first production procurement contract for high-energy laser weapons in the history of the US Armed Forces. Until now, laser systems in the US military had only been in the testing and prototyping phases. With this contract, the technology officially moves into regular troop procurement.
AeroVironment's LOCUST X3 system is designed for multi-layered air defence against unmanned aerial vehicles, ranging from small commercial drones to tactical reconnaissance and attack drones. The contract could also help the company attract interest from Europe, where drone sightings at airports or over NATO territories are currently a recurring source of tension between EU countries and Russia. The cost advantage is also likely to play a role here. While conventional interceptor missiles often cost hundreds of thousands of dollars per shot, the variable operating costs for a laser shot are less than USD 5 per target engagement. That is a huge step forward.
AeroVironment will deliver several dozen units in the coming years, including maintenance, software support and training. The city of Albuquerque, New Mexico, is also set to benefit from the deal, as the company plans to expand its production capacity there. Following an extremely volatile first half of the year, AeroVironment's stock has regained momentum thanks to the contract. However, the Nasdaq-listed stock still has a long way to go before reaching its annual high of more than USD 400.
With Volatus Aerospace, investors are betting on a rapidly growing drone manufacturer. AeroVironment is likely to come more into the spotlight in the coming years, given its drone defence capabilities. BAE Systems is an established British defence contractor with a very long order pipeline.
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