Drone Manufacturers Take Flight: Grading 3 Names
Parsing the charts of Unusual Machines, Red Cat Holdings and Ondas.
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Modern day warfare is highly automated, and drone usage has skyrocketed. According to Just Security, from 2020 through 2024, drone attacks in conflict settings have increased by 4,000%.
Several drone stocks took flight on Thursday due to a Wall Street Journal article that claimed the Trump administration was negotiating funding for several U.S. based manufacturers. The U.S. is seeking to ramp up domestic production and control costs by facilitating the creation of cheap, efficient and expendable drones.
Like modern drones themselves, the stocks of these companies tend to be small and are capable of making quick moves in any direction, so investors need to approach these names with care. Let’s take a closer look at several drone stocks, which have suddenly caught the attention of investors.
1. Unusual Machines (UMAC)
Shares of Unusual Machines (UMAC) shot higher by 57% on Thursday. The Orlando, Florida-based manufacturer of first-person-view drone components has gained 118% year to date, and 482% over the past 12 months.
Despite those stellar performance figures, Unusual Machines has a market capitalization of just $1.41 billion. This is a small stock, subject to wild fluctuations and wide spreads. On Thursday, Unusual Machines closed at an all-time high, but the stock has only been publicly traded since February 2024.
Unusual Machines is a bit of a gamble. In a momentum-driven bull market, there’s no telling how high it could fly. On the other hand, if Thursday’s huge gap fills, we could see this stock at $19. My plan for Unusual Machines is to open a small position.
GRADE: B+
2. Ondas Inc (ONDS)
Ondas Inc (ONDS) was one of Thursday’s most active stocks, with nearly a quarter-billion shares traded. The West Palm Beach, Florida-based company manufactures autonomous drones and private wireless networks for industrial and military use.
Ondas shares jumped 22% on Thursday, and have gained 1,138% over the past 12 months. However, Thursday’s rally failed to push the Ondas through the stock’s January highs (shaded teal). Ondas has a market capitalization of $6.6 billion.
We’re going to hold off on buying Ondas unless and until the stock can push past its January highs to the $15.25 area and beyond.
GRADE: B-
3. Red Cat Holdings (RCAT)
Red Cat Holdings (RCAT) shares jumped 32% on Thursday, and have gained 130% over the past 12 months. The South Salt Lake, Utah-based manufacturer of small unmanned aircraft and robotic solutions has a market capitalization of $2.14 billion.
Like Ondas, Red Cat must deal with nearby resistance. The stock has been rejected numerous times in the area between $17.35 and $18.85 (shaded teal).
GRADE: C
At the time of publication, Ponsi was long UMAC.
