Volatus Aerospace, Hensoldt, and Rheinmetall: Three Stocks for the New Drone and Defence Boom

Volatus: A Drone Stock with Plenty of Upside Potential

The shares of Volatus Aerospace are currently one of the most exciting drone plays on the market. In recent years, the Canadian specialist has evolved from a relatively unremarkable service provider into an integrated aerospace and defence platform. It is precisely this transformation that makes the stock so interesting. Volatus not only sells drones but also covers an ever-wider range of the value chain: hardware, sensors, training, flight operations, data analysis, maintenance, software, and, increasingly, defence applications.

This broad portfolio is crucial because the market is changing rapidly. In the civilian sector, drones have long been used for pipeline monitoring, infrastructure inspections, energy supply, forestry, agriculture, and disaster response. In the military sector, unmanned systems have become indispensable. The war in Ukraine and the conflicts in the Middle East demonstrate daily just how important reconnaissance, surveillance, target acquisition, and drone defence have become. Companies that can provide operationally ready systems, training, and operational experience for these sectors quickly find themselves on the shopping lists of governments and defence agencies.

This is exactly where Volatus positions itself. In a recent company presentation, the company describes itself as "Commercially Proven. Defense-Ready by Design." This is more than just a slogan. The key is that Volatus uses its commercial business as a foundation and is now leveraging it for military applications. The Canadian company already has operational experience in regulated markets with its own locations in North America and Europe, runs training programs and data platforms, and manages flight operations. This allows Volatus to offer a much broader package to potential clients compared to pure drone manufacturers.

Particularly exciting is the new production and integration strategy in Mirabel in the Canadian province of Québec. There, Volatus is building a scalable production and integration platform for the mass production of military long-range drones at a cost of CAD 10 million. The site is secured for 10 years and is strategically well chosen. Canada aims to anchor its defence industry more firmly within its own borders. In addition, Western governments are looking for suppliers—like Volatus—that are not dependent on problematic supply chains. For Volatus, this could present a perfect window of opportunity. The substantial investments make it clear that Volatus is already preparing for significantly larger government or NATO-related programs. This could quickly spark new speculation on the stock market. After all, anyone building production capacity for secure, Western drone platforms today could be bidding on larger government programs tomorrow. What is particularly interesting is that Volatus views the facility not just as a factory, but as the centrepiece for system integration, testing, operational readiness, and defence applications.

Software as a Valuation Driver

The second major driver of the stock price could be software. Volatus is working on its own platforms, such as SKYDRA and V-Cortex AI. SKYDRA targets counter-UAS applications—that is, the planning, simulation, and preparation of drone defence operations. This very market is gaining enormous importance. After all, the more drones are deployed on modern battlefields or at critical infrastructure sites, the more crucial it becomes to detect, analyze, and counter hostile systems early on.

Software and recurring revenue are valued significantly higher on the stock market than pure hardware sales. A drone is sold once, whereas a platform can generate revenue repeatedly through licenses, training, data packages, and ongoing maintenance. If Volatus succeeds in this transition, the perception of the stock would change. It could gradually evolve from a drone provider into a scalable defence tech stock.

The financial figures also provide initial indications of this shift. In fiscal year 2025, revenue rose by 26% to just over CAD 34 million. The defence and equipment segment saw particularly strong growth, with revenue more than doubling. Europe and the United Kingdom gained significantly in importance due to NATO-related activities. In the first quarter of 2026, revenue of approximately CAD 5.6 million still seemed unspectacular. However, the gross margin reached 35%—the highest level ever recorded in a first quarter in the company's history. This suggests that the business mix is slowly becoming more high-value. For 2026, management is already expecting recurring revenue of around CAD 20 million. On top of that, the Canadian company's well-stocked order pipeline—valued at around CAD 600 million at the end of March—shows that the story of recurring revenue streams from training, services, data streams, and defence software has long since surpassed the sale of individual aircraft.

In the short term, however, patience is still required. Volatus continues to post losses on the bottom line. In addition, delays in defence contracts and supply chain issues weighed on the first quarter. Management emphasizes, however, that the affected contracts remain active and that deliveries have already been postponed to the second quarter. If this is confirmed, the news flow could look significantly better again in the coming months.

NATO Potential and Takeover Speculation

There is a great deal of potential in the defence business. Volatus has already secured a multi-year training contract with a NATO-allied government. Such contracts are interesting not because of their absolute size but because of their signal value. Once a company starts supplying to a NATO-affiliated environment, it becomes more visible for future programs.

In addition, Volatus is working with Sentinel R&D on a Canadian interceptor UAV platform. For now, this is a strategic collaboration rather than a billion-dollar contract. But the topic fits perfectly with the current climate. Drone defence is becoming increasingly important for armies, airports, energy facilities, and critical infrastructure. Should Canada consistently implement its industrial defence strategy with domestic suppliers, Volatus—as a Canadian-controlled platform—could benefit disproportionately.

The capital market story is also gaining momentum. Following the move to the Toronto Stock Exchange, the stock is more accessible to institutional investors. Investors have long been speculating about whether further capital market moves might follow in the medium term. There is also takeover speculation. Major defence and technology conglomerates are under pressure to quickly establish a foothold in the drone sector. Developing their own platforms takes time. Smaller specialists with proven technology, operational experience, and government references can therefore quickly become targets. Volatus would be of interest to larger players because the company offers not just individual drones, but an entire ecosystem encompassing production, software, training, and operations.

Of course, the stock remains highly speculative. Its valuation is heavily based on future expectations. Volatus must demonstrate that its pipeline actually translates into revenue, that Mirabel scales, and that software solutions like SKYDRA gain commercial traction. If it succeeds, this small Canadian drone stock could be on the verge of a new valuation level. Stock market experts also remain optimistic. The average analyst consensus price target for this hot stock is CAD 1.04, about 75% above the current price.

Hensoldt: The Sensing Champion

The ideal German counterpart to Volatus is Hensoldt. While Volatus represents drones, operational platforms, and software potential, Hensoldt provides the sensor and electronics side of the new defence landscape. Radar, optronics, electronic warfare, and situational awareness are central components of modern armed forces. Without sensors, even the best drone remains blind.

Operationally, things are going well at Hensoldt. Order intake more than doubled in the first quarter of 2026, and the order backlog reached a new record high. Demand is particularly strong for radar and sensor systems for vehicles, air defence, and aircraft. Electronic warfare is also becoming more important. The goal here is to jam enemy systems, protect one's own platforms, and analyze information more quickly.

This is precisely where the strategic appeal lies. Modern warfare is becoming increasingly data-driven. Whoever can see, detect, jam, and protect has a decisive advantage. Hensoldt is thus one of the key German beneficiaries of the defence boom. While the stock is no longer a bargain following the rally, visibility remains high. Should Europe indeed expand its defence capabilities over the coming years, Hensoldt is likely to continue growing alongside it.

Rheinmetall: Germany's Major Drone Player

The defence boom is even more evident at Rheinmetall. The Düsseldorf-based DAX-listed company has long been considered one of the major winners of European rearmament. But it is not just the traditional business with ammunition, tanks, and military vehicles that is exciting. Rheinmetall is now also making increasing inroads into the drone market. In particular, so-called loitering munition systems could become a key growth area in the coming years. These are drones that circle over the operational area, conduct reconnaissance on targets, and can strike with precision when necessary. The war in Ukraine has shown just how significantly such systems are transforming modern warfare.

The fact that this sector is not just a pipe dream for the Rheinland-based company is demonstrated by the latest Bundeswehr contract for the FV-014 drone. The framework agreement is worth billions, with the first call-off amounting to approximately EUR 300 million. Deliveries are scheduled to begin in 2027 following qualification. This gives Rheinmetall its own drone initiative, which fits perfectly with the group's traditional expertise in ammunition and platforms. In addition, Rheinmetall is collaborating with Auterion on a standardized operating system for military drone systems. It is precisely at this intersection of hardware, software, ammunition, and connectivity that a new industrial value chain is currently emerging. For long-term investors looking to bet on military stocks, Rheinmetall thus remains not only a major beneficiary of military buildup but also, increasingly, a German drone and defence tech stock.

The Western world is upgrading its technology. Drones, sensors, software, autonomous systems, and military mobility will become increasingly important in the coming years. This will benefit not only the industry's big names like Rheinmetall or Hensoldt, but also specialized second-tier companies such as Volatus Aerospace. Of the trio presented here, the Canadian company remains the most speculative investment. The company has yet to prove its operational effectiveness but is in an exceptionally promising position. If the ramp-up in Mirabel succeeds, NATO-related contracts expand, and software solutions like SKYDRA gain traction, the stock could be fully revalued and see even stronger price gains. Hensoldt and Rheinmetall are the more defensive components of the same investment story, which is far from over. In fact, despite recent signs of peace in the Middle East, the drone and defence boom appears to be only just beginning.