Should investors play Defence in FY2025?

Source : Should investors play Defence in FY2025? - TAMIM Asset Management

While markets and investors are often captivated by sectors promising rapid growth and technological advancements, there are times when strategic investments in more stable sectors can offer “defence” against economic downturns.

One such sector is Defence, where substantial government spending provides a consistent revenue stream. The United States continues to allocate enormous sums to defence, and recently, the Australian government has also flagged the need for significant investment in its forces and capabilities over the coming decade.

This sector not only includes established giants with sustainable business models but also hidden gems that can surge by supplying innovative solutions.

"Promising Players in the Australian Defense Sector

DroneShield

DroneShield Ltd (ASX: DRO) is a leading provider of counter-drone (C-UAS) and multi-mission unmanned systems (C-UxS) solutions.The company uses artificial intelligence and machine learning to deliver advanced technologies for military, government, and commercial organisations in over 70 countries. DroneShield’s product portfolio includes fixed-site, mobile, and handheld systems for detecting, tracking, and defeating drones. Their solutions integrate multiple sensors and effectors, offering a comprehensive layered defence against drone threats.In the most recent quarterly report, DroneShield reported incredible financial results for the first quarter of 2024, with revenue growing 10 times year-over-year and a significant increase in order intake.

The company has also expanded its global footprint, securing major contracts with military and government agencies, particularly in the US. Over the past 12 months, DroneShield’s share price has rocketed, reflecting the growing demand for counter-drone solutions and the company’s successful execution of its strategic initiatives.

As the threat of drone-related incidents continues to rise, DroneShield is well-positioned to capitalise on the increasing need for effective counter-drone technologies."