AeroVironment (AVAV)

Couple of missteps, which disappointed the market. His position is very small, as they're keeping an eye on it. Still one of the best when it comes to drone technology.

It's gotten too controversial, and the defence sector is too tough. AVA is -51% in 6 months.

Up 32% the past week after Trump announced he would boost defence spending.

They report Tuesday. Are a drone maker. Drones are in demand in warfare. There could be profit-taking after their report.

Has also been around a long time; a lot of military companies have pivoted and taken off since the Ukraine war. In the language of the military, they have drones called "loitering munitions" (kamikaze drones). Nice 12-month price target of $290. No dividend.

Note that all his Top Picks today aren't in nosebleed territory, but they're very popular. So you really need to go in by thirds. You can buy some today, but save 2/3 to make purchases later. For this name, buy 1/3 here at $245-250, at $235, and again at $225.

We are fairly surprised AVAV has not done better, considering the ongoing wars and the increased defense spending movement. It remains net debt free and good earnings growth is expected, just not as much as previously. At 40X earnings, investors are questioning its premium valuation in light of slowing growth. It is also in the cross hairs of the new US government, which recently issued 'stop work' orders on some contracts to foreign entities'. We would like to see it as a HOLD, but the political risk is hard to quantify. If the Ukraine War ends there will also likely be a sentiment shift (negative) towards its growth prospects. We would thus be OK letting this go. 
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Confusing. They just delivered record revenue, up 24% YOY and they won a 5-year contract with the US Army. The street expected higher guidance and not a reiteration, so shares are selling off.

Shares are slumping from its recent peak because the Pentagon feels that AVA is charging too much money. And it trades at a high 50x PE. That said, he likes it.

Good place for inexpensive military equipment. Would recommend it.