Drone stocks to buy amid a U.S. defense budget request increase of 44% for fiscal year 2027 offer investors an opportunity to pump up their portfolios.
The drone stocks to buy amid a U.S. defense budget request boost of 44% includes tens of billions of dollars to fund drones for use in protecting the U.S. homeland, as well as in military activities beyond America’s borders. Another important development occurred when President Trump extended the U.S. ceasefire with Iran indefinitely late Tuesday afternoon, April 21, to give the militarily weakened nation a chance for new leaders of the Islamic Republic to take a unified position on a potential peace agreement.
However, the U.S. military will continue its blockade of Iranian ports to cut off revenue-producing oil exports that can help fund Iran’s miliary to wage war against Israel, U.S. interests in the Middle East and all six Gulf Cooperation Council (GCC) nations — Saudi Arabia, the United Arab Emirates (UAE), Qatar, Kuwait, Bahrain and Oman. Also hit by Iran’s missiles and other projectiles have been Jordan and Iraq, as well as 28 ships in or near the Strait of Hormuz.
Iran’s attacks caused significant damage and targeted critical energy infrastructure, airports and commercial centers. It shows that Iran may be considerably less potent militarily since Israel and the United States took military action against it on Feb. 28, but the country is not without ways to keep resisting or fighting back.
Drone Stocks to Buy Amid a U.S. Defense Budget Request Increase: Perry’s Prediction
“The stock market has rebounded strongly, with the S&P and Nasdaq trading to new all-time highs as investors look for a net positive outcome in the Iran war, while raising expectations for a bullish first-quarter reporting period,” Bryan Perry wrote to his Breakout Blue Chip Trader advisory service on Tuesday, April 21.
Bryan Perry heads Breakout Blue Chip Trader and Cash Machine.
With negotiations not showing signs of an imminent Middle East breakthrough, WTI crude oil is trading at $89.40 per barrel, near the low end of the current range, suggesting other oil-producing nations still are managing supply to global markets, Perry commented. Bond yields are holding steady, and gold is trading off a touch as the dollar is holding firm, he added.
For investors who seek income from their investments, Perry proposed his Cash Machine newsletter with its current portfolio of 29 holdings and a blended yield of 10.3%. Except for one gold position, the others all pay monthly distributions, including two oil investments, he added.
The Cash Machine portfolio has proven to be resilient in a highly uncertain market, and if the economy does show any signs of slowing due to higher energy prices and softening labor markets, sentiment for the Fed to ease will rise, sending high-yield assets higher, Perry predicted.
“I’ll look to expand the Top Buys list once I can ascertain how the market reacts to the Iran situation over the next week or two,” Perry wrote to his Cash Machine customers. “It is a highly fluid situation where I want to maintain a shorter list for now.”
Drone Stocks to Buy Amid a U.S. Defense Budget Request Increase: Woods’ Wisdom
A close follower of the defense industry is Jim Woods, a former U.S. Army paratrooper and officer who now heads the Tactical Trader advisory service and the monthly Forecasts & Strategies investment newsletter. For times like now, when a stock is in a sector that’s outpacing the rest of the market, and at least partly due to the Iran war and the closure of the Strait of Hormuz, then it deserves tactical attention, wrote Jim Woods, who specializes in doing so in his Tactical Trader advisory service. Woods recommended a little-known oil stock on Tuesday, March 31, that does not need to use tankers that traverse through the Strait of Hormuz.
Paul Dykewicz meets with Jim Woods, head of Tactical Trader.
Stocks are at a sort of “wait-and-see” moment regarding the Iran war ceasefire and what that might look like in the days ahead, Woods wrote to his Forecasts & Strategies and Tactical Trader subscribers.
“I hope things will settle and the market can get back to the bullish ways of the past two weeks,” Woods wrote. “But this week, the move has been tentative, and profits are being taken…”
There will be plenty of time to add new opportunities in the days, weeks and months to come, so be ready, Woods advised.
Drone Stocks to Buy Amid a U.S. Defense Budget Request Increase: Ondas
West Palm Beach, Florida-based Ondas Inc. (NASDAQ: ONDS) provides private wireless, data and autonomous drone solutions for government and industrial markets by using mission-critical technologies. Operating through Ondas Networks and Ondas Autonomous Systems, the company focuses on automated data collection, drone security and, according to Ondas Holdings, advanced robotics for rail, energy and defense.
The company’s Ondas Autonomous Systems (OAS), Ondas Capital and Ondas Networks combine to offer a combination of aerial intelligence and next-generation connectivity to aid security, operational efficiency and data-driven decision-making across key industries. Ondas Autonomous Systems seeks to deliver a portfolio of AI-powered defense and security platforms deployed globally to protect sensitive sites, populations and critical infrastructure.
Through its operating companies — American Robotics, Airobotics, Apeiro Motion, Roboteam Ltd. and Sentrycs — OAS offers an integrated suite of autonomous aerial, ground and counter-unmanned aircraft system (UAS) solutions. These include the Optimus System, the first FAA-certified small UAS for fully automated aerial security and data capture; Iron Drone Raider, an autonomous counter-UAS interception platform; Roboteam’s tactical ground robotic systems for military and special operations forces; Apeiro Motion’s advanced ground robotics and tethered UAV systems with proprietary navigation and communications technologies; and Sentrycs’ Cyber-over-RF (CoRF) and protocol-manipulation counter-UAS capabilities.
Ondas Capital’s aim is to combine advisory services and strategic investment management services to accelerate the rapid scaling and global deployment of unmanned and autonomous systems to allied defense and security markets. Ondas Networks provides software-defined wireless broadband technology through its FullMAX platform. That standards-based system delivers high-performance connectivity for mission-critical Internet of Things (IoT) applications primarily for rail, utilities, oil and gas, transportation and government markets.
Drone Stocks to Buy Amid a U.S. Defense Budget Request Increase: Oppenheimer’s Opinion
Timothy Horan, an equity research analyst at the Oppenheimer investment firm, rates ONDS as “outperform” and gave it a $16 price target in a new report posted April 20. The company is reporting “strong order flow” as contracts are coming in faster and larger than expected, Horan wrote. Ondas announced a few new deals recently and has others on the way, reflecting upside to the second half of 2026 and longer-term estimates currently ahead of earnings, he added.
Chart courtesy of www.stockcharts.com.
“The war in Iran has shown the U.S. has fallen behind in drone and counter-drone technology,” Horan wrote. “ONDS is rapidly expanding its platform ecosystem and capabilities through attractive acquisitions, with further industry consolidation inevitable. The company is also making key inroads with the U.S. government via its Palantir partnership and merger with Mistral, in which a first-mover advantage and strong balance sheet are major differentiators.”
The stock and overall sector have pulled back amid broader market volatility, Horan commented. But the valuation starts looking very attractive two years out as the company quickly scales from zero to a $1 billion business with first-mover advantage, a strong balance sheet and latent/spare manufacturing capacity to meet ramping demand, he added.
The United States recognizes the threat and effectiveness of drone technology, along with the limitations of responding with legacy equipment, Horan continued. To address this, the Pentagon is looking to boost investment and expand the United States’ autonomous capabilities with a proposed FY27 of $54.6 billion for its Defense Autononmous Warfare Group (DAWG), up from $225 million in FY26, he added.
“The DAWG initiative emerged from the former Replicator program,” Horan wrote. “The company’s ONBERG JV with Heidelberg in Germany could open an avenue into the Ukraine market, and with limited downside to results if the war were to end given its current limited exposure. This JV will be a one-stop shop for autonomous drone systems, combining battle-proven ONDS technologies with scalable precision manufacturing using European supply chains.”
ONDS’ 4M Defense segment recently won a $50 million-plus program for a large scale border demining operation in Israel. It also received the initial $68 million order under its previously announced $140 million program with its INDO Earth subsidiary. ONDS further was selected to deploy counter-drone solutions for the 2026 FIFA World Cup being hosted across several cities throughout North America this summer.
“The company’s Iron Drone system is designed to defend assets against hostile drones in complex environments with minimal collateral damage,” Horan counseled. “Iron Drone is an automated intercepting system intended to eliminate small enemy drones without using GPS or RF jamming.”
Launched from a designated pod, the intercepting drone flies autonomously towards targets under radar guidance, then identifies and locks onto the target using proprietary computer vision and artificial intelligence (AI) capabilities. The intercepting drone follows the target, then incapacitates and captures it to use a ballistic net and a parachute to lower it safely to the ground.
“As the threat of nefarious drones grows, this is a public safety and homeland security capability aimed at helping to protect cities, stadiums, military bases, energy facilities and other high-risk assets and sites,” Horan concluded.
Drone Stocks to Buy Amid a U.S. Defense Budget Request Increase: Lockheed Martin
With 18% of the company’s revenue coming from its satellite and space business and a dividend yield of 2.28%, Bethesda, Maryland-based Lockheed Martin (NYSE: LMT) is a good way to participate in the segment’s growth and earn income at the same time. In February, LMT increased its quarterly dividend from $3.30 a share to $3.45 a share. The increase equals an annual dividend growth rate of 4.5%. For the past 24 years, LMT has consistently increased its dividend.
As a giant defense and aerospace prime contractor, Lockheed Martin is not as well known for its drone activities but that business is growing part of its business. Lockheed Martin generates 15-18% of its revenues from space, satellite and missile businesses, said Michelle Connell, of heads Dallas-based Portia Capital Management.
Michelle Connell heads Portia Capital Management.
Lockheed Martin is heavily invested in advanced autonomous systems, focusing on AI-enabled air, sea and land drones, including the Nomad VTOL UAS and counter-UAS technologies. Key 2025-2026 initiatives include a $50 million investment in Saildrone for armed maritime drones, and Skunk Works’ testing of 5th-gen fighter-controlled UAVs, according to the company.
Last quarter, LMT reported total 2025 sales of $75.05 billion and the backlog for the company was especially strong at $194 billion — two and a half times the company’s total revenues, Connell counseled. LMT’s free cash flow also beat expectations with $6.9 billion. The strong free cash flow should give investors a level of comfort regarding LMT’s dividend payments, she added.
This year, LMT has announced several new satellite contracts. On March 3, 2026, the company announced a partnership with Mitsubishi Electric of an anti-jamming defense communication system for Japan in the Asia-Pacific region. On April 16, LMT won $105 million contract to upgrade the Global Positioning System owned by the United States.
Chart courtesy of www.stockcharts.com.
Drone Stocks to Buy Amid a U.S. Defense Budget Request Increase: AeroVironment
On April 20, the U.S. Navy announced successful tests of AeroVironment Inc.’s (NASDAQ: AVAV) LOCUST directed energy laser system aircraft carrier USS George H.W. Bush. The LOCUST was able to identify, to track and to defeat multiple drone threats, wrote Louie DiPalma, an aerospace and defense analyst with the Chicago-based William Blair & Co. investment firm.
On the other hand, the U.S. Army last month announced that it was not moving forward with the Lockheed Martin (LMT $581.28) IFPC laser system. In addition to being effective at mitigating drone threats, the LOCUST appears to appeal to the Department of War because of its versatility, DiPalma wrote. It can be deployed on Army vehicles (e.g., Infantry Squad Vehicles and Joint Light Tactical Vehicles) and at sea, he added.
“We believe this U.S. Navy announcement positions AeroVironment and nLight (NASDAQ; LASR) as the two leading Department of War providers of directed energy systems,” DiPalma wrote in his research note. “AeroVironment and nLight may partner for future programs.”
In addition, DiPalma added that he updated his investment firm’s Game of Drones tracker for AeroVironment’s recent Medium Range Reconnaissance win. It is also interesting that AeroVironment is seeking to join the incumbent three vendors on the Army’s Launched Effects Short Range program with its new MAYHEM 10 system, he added.
“Industry awards are set to pick up over the next five months into the government fiscal year-end,” DiPalma wrote.
A potential exists for more than a 20% upside to shares over the next year, DiPalma wrote. AeroVironment currently trades at about 28 times the consensus 2027 earnings before interest, taxes, depreciation and amortization (EBITDA) estimate, he added.
Chart courtesy of www.stockcharts.com.
Drone Stocks to Buy Amid a U.S. Defense Budget Request Increase: Geopolitical Risk
The current war in Iran actually stems from the 1979 Islamic Revolution, said Hugh Grossman, senior leader of the DayTrade SPY options trading room.
“The central, state-sanctioned change followed the November 4, 1979, seizure of the U.S. Embassy in Tehran and the subsequent 444-day hostage crisis, symbolizing opposition to U.S. policies,” Grossman said. “In chanting ‘Death to America,’ perhaps President Jimmy Carter should have finished off the conflict at that time, but Americans, being the patient society we are, graciously kicked the problem down the road. Decades later, Iran has developed — ironically with the financial, military and technological help from America — the means to seriously threaten us.”
President Trump had little choice but to end this “relentless threat,” not to mention the horrific slaughters the current regime did to its own people by killing tens of thousands of protestors opposing the government, Grossman commented. Geopolitical conflicts can have far-reaching effects on the stock market, he added.
“Initially, the resilient market shrugged off the first attack on Tehran,” Grossman recalled. “Where we will see the effects will be in the increased price of oil as Iran escalates its threats to shipping through the Strait of Hormuz, which carries a fifth of the world’s oil supplies, but this I expect to be short-lived. Oil increases in price, creates inflation and a threat to interest rates, which is why SPDR S&P 500 (SPY) has dropped so dramatically in the days following the attack.”
Grossman advised investors to he doubted we will see long-term devastating effects, since the economy is still fundamentally strong with consumers and businesses driving solid economic growth. What is also different this time, as opposed to prior tightening of oil supplies as seen in the 1973 oil embargo, is that the United States became a net energy exporter in 2001.
Grossman and his partner Jon Johnson have an options trading success rate with the State Street SPDR S&P 500 ETF Trust NYSE: SPY) of more than 83%. With the market remaining volatile, Grossman recommended the DayTrade SPY options trading room as a good alternative or supplement to investing in stocks.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. Follow Paul on Twitter @PaulDykewicz.
