These days, if you’re investing in drone tech and looking for drone stocks to watch, keep these words in mind…
If the wind blows hard enough, even a turkey can fly.
In today’s video, we’ll discuss one drone stock that I am avoiding, and two more that are eagles… These two drone stocks to watch should continue to gain altitude long after the current stock-buying mania (which is a bubble) subsides.
Before I tell you the names of those companies, there’s an important investing lesson in all this.
A lesson about the aforementioned turkey that can fly if it catches the right tailwind…
Turkeys, in my example, are companies that have little in the way of revenue or profit. But they also have business plans that require investors to take huge leaps of faith. Risk-taking is part of any business, so I’m not saying there’s anything wrong with it… or that a company won’t succeed.
But the potential problem is that when investor faith runs out — when the “buying” tailwinds die down — there may not be anything else to prop up the stock.
On the other hand, eagles are stocks that already have a history of demonstrated sales, cash flow and profit, which tends to help their share price do well over long periods.
For instance, many keep asking me about AgEagle Aerial Systems Inc. (NYSEAmerican: UAVS).
It may have “Eagle” in its name, but it’s a turkey.
I’ve said to avoid the stock and continue to say that now. In past quarters, the company said its focus was using drones to help farmers manage their crops. More recently, it seems to be shifting focus into being a contract manufacturer of drones.
But investors have to take a big leap of faith here. According to its reported numbers, revenue is growing but tiny — $3 million in sales so far this year. Yet AgEagle is a long way from profitability, with a widening amount of red ink in both cash flow and bottom-line losses.
And the company continues to offer more and more stock for sale. The number of shares available has more than quadrupled to nearly 30 million in the past few years. Those offerings generate cash for the company, but also dilute the value of existing shareholders’ stakes.
And yet the stock price has more than doubled in value to more than $7 over the past few trading sessions. Perhaps the shares can keep moving higher. If you made money in the stock, great! Just keep in mind the difference between short-term speculation with investing over a long period of time.
When it comes to eagles, I see two drone stocks to watch.
Check out my short video and let’s talk about the eagles in the drone stock sector. Then leave your thoughts in the comments below.
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