The past few days have been eventful for drone maker AeroVironment (AVAV 3.33%) and, consequently, there's been plenty of action in its stock. These were generally positive and helped push the company's equity up by 23% week to date as of Friday before market open.
Rising like one of its drones
On Tuesday, Aerovironment announced that the federal government had approved a new $20.2 million investment to expand the company's factory in Huntsville, Alabama. These funds are to be used to increase the output of its Freedom Eagle-1 (FE-1), an unmanned aircraft system missile.
Image source: Getty Images.
Two days later, AeroVironment revealed that it's been awarded a $20 million contract by a research arm of the Air Force. This is to be devoted to research on next-generation ceramic and ceramic matrix composite materials for "extreme" use cases in defense and aerospace technology.
The most powerful catalyst for the stock over the week also occurred on Thursday. The Wall Street Journal reported that the Trump administration aims to invest in drone companies to boost the domestic industry. Another goal would be to lower the costs of such goods.
Citing unnamed "people familiar with the matter," the Journal wrote that this effort is in a discussion phase. Those sources said that companies being considered for investment include Unusual Machines (which, incidentally, has Donald Trump Jr. as a shareholder and member of its advisory board) and an early stage enterprise, Neros Technologies.
NASDAQ: AVAV
Key Data Points
Inclusion despite exclusion
AeroVironment wasn't identified as one of those drone companies, but that was hardly necessary for it to become a hot stock. Even if the company doesn't get a dollar of federal money, it's sure to gain simply by being inside a sector favored by this country's executive branch.
At this point, though, the federal investments are speculation. That grant for the factory and the new Air Force contract, however, are concrete developments heightening AeroVironment's prominence at a time when drones are popular. I think that alone should be enough to inspire any investor to consider buying the stock.
