Drone wall for Europe! Almonty, DroneShield, and Hensoldt – Defense stocks taking off again!

Why aren't drones simply shot down in the EU?

At the EU summit in Copenhagen, drone defense dominated the agenda. The trigger: recent incidents in Denmark, where unidentified drones have repeatedly appeared near airports and military sites. Similar cases are on the rise in Poland and Germany as well. These unmanned aircraft are increasingly being used to spy on critical infrastructure and military facilities.

EU Commission President Ursula von der Leyen spoke of an "urgent security policy task." The aim is to protect Europe from a "new dimension of hybrid attacks." She referred to the planned drone wall along the eastern external borders of the Union, which will initially consist of a network of sensors and surveillance systems. "We must not allow ourselves to be put in a situation where we have to respond to cheap drones with expensive fighter jets," warned von der Leyen. Therefore, the installation of jammers, radar systems, and interception technologies should be prioritized with EU funds. The expansion is to be financed by existing funds such as the EUR 150 billion SAFE program, which is earmarked for defense cooperation.

Why not just shoot down the drones? There is no comprehensive reconnaissance and defense system. In addition, the risk of damage from debris and projectiles is high over populated areas and near civil air traffic. Investment in modern technology is needed first.

Almonty Industries: Analysts expect profits to skyrocket

Tungsten is critical for defense, technology, and more. The extremely hard metal is also used in drones. While civilian models rely mostly on lightweight materials such as carbon or aluminum, the highly dense and heat-resistant metal plays an important role, especially in military drones. There, it is used as a counterweight for stabilization in heat-stressed components of drives or in electronics. In addition, tungsten's physical properties make it suitable for special applications such as reducing radar signatures or as a component in ammunition carried by drones. This makes the metal, which is traditionally indispensable in the defense industry, a strategically relevant raw material in the future market of drone technology.

This is another example of why Almonty Industries is one of the hottest commodity stocks. Regardless of which defense contractor wins contracts for drones, missiles, tanks, or ammunition, they all require tungsten. In just a few weeks, Almonty will be operating the largest tungsten mine outside of China and Russia. The Sangdong mine in South Korea is currently being prepared for production. The Company already produces tungsten in Portugal, with further expansion potential there. At the same time, CEO Lewis Black is working on a takeover in the US, which could attract direct support from the US government. At Lithium Americas and MP Materials, the Trump administration's entry caused a surge in share prices. A similar scenario could unfold here. Briley Securities recently set a price target of USD 7, but with the current share price around USD 6, actively traded in Germany on platforms like Tradegate, the upside could be much higher.

And Almonty has a second commodity ace up its sleeve: molybdenum. The deposit is located within the Sangdong project in South Korea. An extensive drilling program has now been launched. Twenty-six drill holes totaling around 11,700 meters are planned to confirm the previously identified structures more precisely and identify potential reserves. Here, too, high profit margins are beckoning. Molybdenum is also a strategic metal for which there is a supply shortage. It is used in steel refining and in high-tech industries such as aerospace, defense, semiconductors, and renewable energies. Shortly after the deposit was discovered, a supply contract was signed with a South Korean supplier to the aerospace company SpaceX.

Interested parties should mark October 8 in their calendars. That is when CEO Lewis Black will be presenting at the virtual IIF investor conference. Private and institutional investors can register here to participate free of charge. Many exciting German and international small and mid-caps will be presenting.

DroneShield & Hensoldt: Winners in the drone alarm

One German winner in the drone alarm is Hensoldt. The prospect of new billion-dollar investments has revived the stock. This is because Hensoldt is involved in reconnaissance with its radar systems. In line with this, the sensor specialist announced yesterday that it is expanding its production capacities.

At the new production site near Ulm, the focus will be on the series production of radars for air defense and drone defense. From 2027, around 1,000 radars are to be produced per year. This will significantly increase the production volume of key products. A mid-double-digit million euro amount will be invested for this purpose. Hensoldt CFO Christian Ladurner commented: "Our main customers – above all the German Armed Forces – have an urgent need, and under the current structures we are not in a position to meet these requirements. Therefore, expanding our capacities is not only necessary, but also without alternative."

When it comes to drone defense stocks, DroneShield is, of course, a name that cannot be ignored. Like Hensoldt, recent incidents in the EU have also given DroneShield shares new momentum. The Australian drone defense specialist's stock has risen by over 50% in the last two weeks and is now trading at EUR 3.04. At the beginning of January, it was still at EUR 0.52. This brings the price gain in the current year to over 500%. When presenting its latest quarterly figures, the Company confirmed that its products had been extensively tested by many customers and that it therefore expects to receive large orders shortly. Such contracts will be key to supporting the current valuation of AUD 4.50 billion.

Almonty remains a core investment in the defense sector. As a tungsten producer, it supplies a critical metal for countless applications in the military and high-tech. With rapidly rising sales and profits ahead, the stock still looks reasonably priced. DroneShield, by contrast, is anything but a bargain. The Company urgently needs larger orders to grow into its valuation. Hensoldt also needs more orders after its order book disappointed at the half-year mark.