The shares had been trying to push higher from a downtrend channel, but this week's bounce was rejected at the 21-week simple moving average (SMA). Should the stock close the week above $55, it will be worth consideration on the technical side next week.
For now, it's moved up my watchlist on the pattern side, but I'm really intrigued by some developments in the drone/UAV market outside of military applications.
As we continue to implement social distancing in our personal lives, it should be on our radar that it will happen commercially as well. I'm not talking about work-at-home. Pretty sure that's been covered to the point everyone is sick of hearing about it.
But what about other commercial activities? Military activities? Health-relative activities?
AeroVironment potentially has a hand in most of these. The company recently teamed up with a small, Canadian company with a ton of experience in the drone and AI field, Draganfly (DFLYF) .
The partnership gives AeroVironment a much-needed foot into the commercial market. Scaling down from military contracts to commercial contracts doesn't fit with its profile in solo fashion, but the right partnership opens up access to a $600 million-plus market for both AeroVironment and Draganfly.
AeroVironment now has a home for its Quantix Mapper systems, which Draganfly will distribute over the next year to industries such as environmental resource management, oil & gas, construction, insurance, and public safety.
Quantix Mapper is a simple-to-use drone empowering users through its fully automated operation and instant insight. Its hybrid design allows the aircraft to launch vertically and transition to horizontal flight, maximizing aerodynamic efficiency and range. Users can immediately view high-resolution imagery on the included Operating Tablet -- no other devices, internet or additional software required.
The oil and gas mention may raise eyebrows, but this is a diverse list of potential markets. We know the environment will continue to be a hot button. Public safety needs are only increasing. Construction may see a big push if we do get a lift in infrastructure spending by the government as a form of stimulus.
Opening up the commercial market adds a market twice the total of AeroVironment 's current sales and provides diversity in revenue. By working with Draganfly, a company already producing drones and products in compliance with current government regulation/component restrictions, it overcomes a major concern about the use of restricted Chinese components.
While Draganfly flies under the market-cap radar of many investing, it may fit as an under-the-radar Covid-19 play. The company recently partnered with the University of South Australia in collaboration with the Australian Department of Defense on a remotely piloted UAV for health monitoring and detection of infectious and respiratory conditions including monitoring temperature, heart and respiratory rates among crowds, airlines, cruise ships, convention centers, border crossing, senior care facilities, workforces, etc.
Basically, anywhere with critical infrastructure facilities, large crowds, or at-risk groups. The AI technology/software is next-level fascinating. This concept revolves around understanding health trends and deploying intervention sooner rather than later and with greater effectiveness.
When we talk about the new paradigm in a post-Covid-19 world, these are the ideas we should envision and embrace. This is what makes the stock one of my favorite high-risk high-reward microcaps for the next 3-5 years.
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