But once you drill down into its growth, there’s plenty to get excited for.
For one, the global drone market is taking off. Projected to soar from about $8.8 billion in market value to more than $82.5 billion by 2032, it’s already sending stocks AeroVironment (SYM: AVAV), Draganfly (SYM: DPRO), L3Harris Technologies (SYM: LHX) flying higher.
Helping, Chinese manufacturers currently dominate the global drone market, with market share estimated anywhere from 70% to 90%. But that scenario is now changing in a big way. The U.S. defense industry, state and local law enforcement agencies, and even commercial entities are banning Chinese-made drones and components due to national security concerns. That’s another major catalyst for the drone stocks we just mentioned.
Even better, drones are seeing big demand in the U.S. military, for crop monitoring and spraying with agriculture, logistics for delivery and warehousing, in the oil and gas industry, in mining and construction, in emergency management, and in renewable energy projects.
While you can always invest in some of the drone companies mentioned above, we can also take a look at exchange-traded funds (ETFs) that could benefit.
It is possible to play the short side of the market when you’re bearish on a stock, betting that the market will decline, or simply to protect your holdings, whether they are individual stocks or mutual funds. This strategy is called the Put Spread.
Let’s say you’ve selected a stock after doing your homework, and you decide that the odds of the stock trading lower are greater than the odds of it trading higher. One way to play your hunch would be to buy a put spread. When buying a put spread, you lock both the maximum loss and the profit potential. For example, on a 10-point put spread, the most you can lose is the amount you paid for the put spread. But, the potential profit is the amount paid subtracted from the strike price differential.
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