Drone stocks: Opportunities with Volatus Aerospace, DroneShield, and Rheinmetall

Volatus: Long-standing drone specialist with strategic advantages

Over the past few months, DroneShield shares in particular have risen rapidly – after all, a provider of drone defense fits well with the times. However, the stock's valuation has already raced ahead. It is also uncertain whether DroneShield will actually benefit directly from projects such as the European drone wall. In addition, offensive and reconnaissance drones are increasingly in demand: Following airspace violations by suspected Russian drones, many decision-makers in Europe want to deter them with their own capabilities. One company that has the potential to benefit from this is Volatus Aerospace. The Canadians have many years of experience with drones and are active in the surveillance of infrastructure such as bridges and pipelines, as well as in automated border protection. Through these long-standing activities, the Company has acquired expertise that can now also be used in the military sector.

Examples include comprehensive approvals, such as for beyond visual line of sight operations, including night flights or operations in controlled airspace. Many of the current drone upstarts do not yet have these approvals. As a Canadian company, Volatus is ideally positioned in regulatory terms – Canada is considered a pioneer in the field of drones. The country recognized the opportunities offered by this technology early on and thus provided companies such as Volatus with perfect conditions. Conditions that can now pay off in times of the drone boom.

Defense companies such as Rheinmetall are specifically purchasing drones

Volatus Aerospace offers its customers not only hardware, but also training and service. This complete value chain makes the Company a sought-after partner, for example, in the training of drone pilots, which takes place at its own Volatus Academy. Last summer, Volatus landed several orders from NATO countries – including training packages. Current media reports, such as the drone special in last Friday's edition of Handelsblatt, repeatedly emphasize the numerous innovations in the drone market. Many of these innovations today originate directly from the two warring parties, Russia and Ukraine. With its many long-standing employees in research and development, Volatus is predestined to translate these innovations into tangible products or to learn from innovations.

The importance of drones for a comprehensive defense portfolio is demonstrated by Rheinmetall's development over the past few years. Following the acquisition of German drone specialist EMT in 2021, Rheinmetall has entered into cooperation agreements with the two US companies Anduril and Auterion. These collaborations primarily focus on software and sophisticated drones. Rheinmetall has also invested in the field of small kamikaze drones. Experts believe that these small drones in particular have significant market potential. They are inexpensive to manufacture and are taking on more and more tasks, such as reconnaissance and attack preparation.

Modern sensors and transport capabilities are Volatus' core competencies

Volatus Aerospace is particularly strong when drones are equipped with high-quality sensors: In addition to high-quality aerial photography, this also includes laser-based LiDAR technology. Another mainstay is cargo drones, such as the Aero2, which can transport up to 40 kg of payload over distances of up to 400 km. The Aero2 is the product of a collaboration between Volatus and Dufour Aerospace. Further collaborations exist with MatrixSpace in the field of radar technology, Kongsberg Geospatial (airspace management), and Ondas Holdings (autonomous border security). Thanks to these collaborations, Volatus has access to complementary technologies without having to get bogged down in research and development.

For investors, Volatus Aerospace shares offer an exciting alternative to well-known defense stocks such as DroneShield and Rheinmetall. Since Volatus comes from the civilian drone business, its business is based on two pillars and should therefore be robust. Despite high investments, Volatus Aerospace recently reduced its EBITDA loss by 85% and increased its revenue in the second quarter by almost 50%. As it is simultaneously winning over NATO countries and gaining momentum in the military sector, Volatus' prospects are considered promising. Last Friday, the stock declined in line with the general market weakness, but the medium-term upward trend remains intact.