One of the most popular shares on the Australian market over the past couple of years has been DroneShield Ltd (ASX: DRO).
Investors have been fighting to get hold of its shares and bidding them higher and higher during this time.
But this wasn't always the case. Five years ago, DroneShield shares were flying under the radar.
So much so, you could have picked up units for just 16 cents apiece in July 2020.
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$10,000 invested in DroneShield shares
Five years ago, a $10,000 investment would have yielded 62,500 DroneShield shares.
Interestingly, its shares didn't go very far for the next two and half years, trading within a relatively narrow range.
For example, in December 2022, they were fetching 18 cents, just 12.5% more than the buy price.
But if you held tightly to them, you would be smiling widely today. Since then, it has been onwards and upwards for DroneShield and its shares. And when I say upwards, I mean it!
Despite pulling back materially this week from its record high, the DroneShield share price ended Friday's session at $3.03.
This means that those 62,500 shares bought five years ago would now have a staggering market value of $189,375.
That's a return of almost $180,000!
This has been driven by incredible demand for counter drone technology from the global defence industry, which has underpinned explosive sales growth.
Can its shares keep rising?
The good news for shareholders is that the gains may not be over.
For example, although it recently downgraded its shares to a hold rating on valuation grounds, Bell Potter's price target of $3.80 now implies potential upside of approximately 25% following last week's pullback.
It recently commented:
The value of contracts received YTD (~$175m) is evidence of increased levels of customer activity and DRO is well placed to meet this demand having materially increased the scale of its operations and heavily invested in its inventory levels. We believe this momentum is likely to continue in CY25 and later periods based on the reported $2.4b sales pipeline.
Structural growth in the market: Increasing hostilities globally are broadly driving a significant increase in defence budgets with aggregate military expenditure exceeding $2.4 trillion USD in 2023. Asymmetric warfare, including drones and counter-drone defence, is one of the fastest growing subsets within this growing military market – the core competency of DRO.
