Morning Watchlist

    Washington Just Lit a Fire Under U.S. Drone Companies - 1/6

    Ian Cooper
    Tuesday, January 6, 20267 min read
    Washington Just Lit a Fire Under U.S. Drone Companies - 1/6

    These 3 Drone Stocks Could Fly to Higher Highs

    We’ve been pounding the table over drone stocks for months and the market has started to agree.

    Back in late August, we highlighted opportunities in three red-hot names:

      AeroVironment (SYM: AVAV), which surged from the mid-$200s to the high-$200s

    • Draganfly (SYM: DPRO), which posted a sharp, momentum-driven move

    Those were big runs but we think they may prove to be only the early innings of a much larger cycle.

    Why? Because drones aren’t a “cool tech trend” anymore. They’re quickly becoming core infrastructure for (1) modern defense and deterrence, (2) border and critical-infrastructure security, and (3) commercial operations ranging from inspection to emergency response to logistics. And at the policy level, Washington is now signaling that it wants the United States to lead the global drone economy, not follow it.

    That’s the setup for a multi-year demand tailwind that can turn the right drone companies into genuine growth stories.

    In June 2025, the White House issued an executive order focused on accelerating safe commercialization, expanding routine drone operations, scaling U.S.-based production, and boosting exports of “trusted, American-manufactured” drone technologies. In plain English: the administration wants drones to become normal - and wants American companies to be the primary beneficiaries.

    Crucially, the same order puts emphasis on In July 2025, Defense Secretary Pete Hegseth issued a directive aimed at accelerating procurement and fielding of drone systems - especially affordable, widely deployable platforms. The theme is clear: reduce bureaucratic drag, approve more U.S. products for purchase, and push capability down to frontline units faster than traditional defense procurement cycles allow.

    That matters because the “drone era” isn’t about a handful of exquisite systems. It’s about Banyan Hill Publishing

    3) Funding is lining up behind modernization priorities.
    One Big Beautiful Bill Act (H.R. 1 / P.L. 119-21)     established substantial FY2025 defense funding across key modernization buckets. Among other items, it included dedicated categories for munitions and supply chain resiliency and for Even when legislation doesn’t name a specific company, it often creates the “budget gravity” that pulls programs forward - and when procurement is being streamlined at the same time, the translation from appropriations to orders can happen faster.

    4) BVLOS rulemaking is moving from “pilot programs” to “default operations.”
    A drone that can inspect a single site
    and

  1. A drone network that can monitor pipelines, borders, utilities, rail lines, and large industrial campuses continuously.

    2. 5) Security policy is tilting demand away from foreign-made systems.
    Put it all together and the message is straightforward: That’s why we believe the best-positioned drone stocks could still have substantial upside.

    The 3 drone stocks we’re watching

    AeroVironment is one of the most recognizable U.S. names in small drones and loitering munitions, with platforms that fit directly into the modern battlefield’s “cheap, fast, and effective” playbook.

    Its Switchblade loitering munition systems are a prime example of where defense demand has been heading: portable, precise, and operationally flexible. The company has also been publicly associated with the Pentagon’s broader push toward rapidly fielding autonomous and uncrewed systems.

    Why it matters now: If procurement timelines compress and “Buy American” becomes more than a slogan, established domestic suppliers with production capacity and battlefield-relevant products can be first in line.

    What to watch: contract momentum, production scaling, and any updates tied to DoD modernization initiatives.

    Company: Ondas Holdings (SYM: ONDS)
    Autonomy + counter-drone exposure in one package

    Two areas stand out:

      Autonomous “drone-in-a-box” systems designed for repeatable missions with limited human intervention

    • What to watch: order flow, margin trajectory, and how quickly the company converts pilots and initial deployments into recurring programs.