AVAV: The Pentagon’s Next Billion-Dollar Darling

The U.S. government is doing something it rarely does outside of wartime or economic crisis.

It's taking ownership shares in private companies.

Not just once, but three times in the past four months. 

First came MP Materials (MP), a rare earths mining company. 

Six weeks later, the government took a stake in chipmaker Intel Corp. (INTC). 

This week, the administration announced additional investments in rare earth mining.

This isn't a bailout or a crisis response.

It's a strategy.

As trade tensions with China drag on, the Trump administration has decided the best way to break America's dependence on Chinese manufacturing is to become a shareholder in U.S. companies. 

The logic is straightforward: if these industries are critical to national security, the government needs to support them directly.

Of course, the government has always supported strategic industries through grants, loans, and contracts.

Defense spending has worked this way for decades.

But something has changed in recent years. 

While the U.S. defense industry was once the envy of the world, countries like China have been catching up. 

Part of the problem is a lack of competition at home.

China has hundreds of defense companies competing for government contracts.

The U.S. has roughly ten large defense contractors that win most of the work.

Since taking office, Trump has made it a priority to change this. 

His administration has been awarding more contracts to smaller companies, particularly in areas where China is investing heavily.

One of those areas is drone technology.

The Future of Warfare

Enter AeroVironment (AVAV).

We first recommended AeroVironment in 2017 when the stock traded at under $30 per share.

This week, shares hit a record high above $400. That's a return of over 1,300% in less than eight years.

AeroVironment is one of the largest independent defense contractors in the United States. 

The company specializes in developing unmanned aircraft systems and other robotic technologies.

These are exactly the types of systems the Pentagon wants more of.

During a recent investor presentation, AeroVironment's CEO revealed that over 1,200 of the company's Puma drones are currently operating in Ukraine. 

These drones represent a significant portion of Ukraine's intelligence and surveillance capabilities.

The economic equation is simple.

Every time Ukraine loses one of these drones, it costs far less than the missile used to destroy it. 

This is the future of warfare: cheap, expendable systems that can be produced in volume.

The Pentagon is paying attention.

This week, the U.S. Air Force Research Laboratory awarded AeroVironment a $499 million contract. 

The ten-year deal will fund the development of technology that protects warfighters from harmful electromagnetic radiation.

It's just one of many contracts the company already has with the Department of Defense.

More are likely on the way.

Once-in-a-lifetime Opportunity

For investors, the opportunity is obvious.

The new cold war with China is driving Washington to support domestic companies in strategic industries. 

Defense technology, particularly in areas like drones and artificial intelligence, will receive enormous government backing.

This creates opportunities that come along once in a generation.

Companies like AeroVironment that are already leaders in critical technologies stand to benefit enormously. 

The government needs them to succeed and is willing to provide the contracts and support necessary to make that happen.

The stock has already delivered extraordinary returns since 2017.

But with Pentagon spending on robotic systems expected to multiply over the next few years, the opportunity ahead could be even larger. 

The Pentagon knows it needs these capabilities.

The administration knows it needs to support these companies.

And the funding is starting to flow.

For investors who position themselves correctly today, this shift in how America supports strategic industries could create generational wealth.

Our 1,300% gain with AVAV shows the power of finding quality companies in the right industries and holding them for the long term.

The new cold war is here.

And this time it's going to make people very, very, rich.