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July 19, 2016 Stock Pick: AeroVironment, Inc. (AVAV)

Stock Price: $27.38

AeroVironment, Inc. engages in the design, development, production, support, and operation of unmanned aircraft systems and electric transportation solutions.

AVAV operates in the extremely hot drone industry. The unmanned aircraft rules were recently finalized by the Federal Aviation Administration (FAA) on June 30th and rules will become effective on August 29th, 2016. Companies already involved in drones will be best positioned to take advantage of the swell in drone usage.

The drone industry is expected to grow to $8.4 billion by 2019 according to ABI Research. AVIV currently has a market cap of $627 million, so AeroVironment is certainly already a major player in the drone space. AVAV generated revenue of $251 million in fiscal 2014 to $259 million in fiscal 2015 and $264 million for fiscal 2016. AVAV generated profit last fiscal year of $8.96 million.

AVAV is involved in many innovative projects including small drones, regular sized drones and even battery & fuel cell systems. The company dates back to 1971 with a strong history in flight. The company has relationships with Lockheed Martin and the US military.

With many companies overbought at this time, AVAV isn't overbought and is at a great point in its chart. We could see AVAV hit 52-week high levels from its current price (above $32.44). AVAV is one of the best positioned companies to take advantage of the drone wave. AVAV is a best of breed company in the drone industry.

Speculative Score: 2

1 Being the Least Speculative and Most Confident

10 Being the Most Speculative and Possibly the Most Risky

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