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3 defence ASX shares set for explosive growth

Colourful explosion to symbolise share price growth
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Australia is fortunate to have a defence sector on the bleeding edge of innovation in many fields. Since the announcement of the nation’s $270 billion in defence spending, many of these ASX shares have come to the attention of investors.

With Australia officially falling into recession, the jobs created by these companies are going to be more important than ever. Moreover, most of the revenue is presently coming from increased spending by many of our friends and neighbours. These include great powers like Europe and the United States, as well as regional powers. 

I earnestly believe we are watching the emergence of an industry sector which is likely to become a great GDP generator for the country, as well as contributing to our national security.

DroneShield Ltd (ASX: DRO)

DroneShield saw its share price rocket up by 29.63% on Thursday, valuing this ASX share at $54 million. On Monday, the company announced it had received orders from 2 separate European countries. DroneShield creates drone detection and non-ballistic counter-drone technology. In particular the company creates products with zero Rf emissions, reducing the likelihood of counter detection. 

The order announced Monday was worth approximately $750,000 in sales proceeds. In addition, these are orders for evaluation and are likely to lead to further opportunities. It included the first sale in a new country and underlines the growing demand for the company‘s products across Europe and globally.

Electro Optic Systems Hldg Ltd (ASX: EOS)

Electro Optic develops sensor technology, which plays a very large role in situational awareness in space operations. Its share price has been steady over the past month, lowering by approximately 1%. Nonetheless, the company continues to push forward with its technological development, and is driving into new areas.

For example, Electro Optic is currently negotiating the sale of 115 remote-operated mobile mounted weapons, including battle tested anti-drone weapons, to the federal government. Furthermore, this ASX share recently announced that, after a multi year program of research, it was moving its “drone kill” technology into production. This is a directed energy weapon, designed to defend against sophisticated drone attacks.

Brainchip Holdings Ltd (ASX: BRN)

The BrainChip share price has rocketed up by 177% in the past month, an outstanding result and a breakthrough price movement for this ASX share. BrainChip is the world’s largest listed pure play artificial intelligence (AI) company. It already has a raft of products in the security sectors. Moreover, it is working on a first of its kind technology that will significantly advance the AI field. 

After finalising chip construction, the company is starting to announce some of its early prototyping agreements for its new technology. On 17 August it announced an agreement with Magik Eye Inc to combine AI with the Magik Eye’s 3D sensing. This partnership will be targeting gesture recognition in a wide array of gaming and consumer products. On 1 September  the Brainchip share price jumped 54% after the company announced a partnership with VORAGO Technologies to support a Phase 1 project for NASA.

Foolish takeaway

Under any analysis, I believe all 3 of these ASX shares should continue to see strong growth. All of them are at the vanguard of emerging defence technologies, with BrainChip and Electro Optic developing new technological areas that could have huge, world-changing significance. 

These 3 stocks could be the next big movers in 2020

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Daryl Mather owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Daryl Mather