Q: I recently decided that this drone firm was worth a roll of the dice. Drones are clearly the weapon of the future as we're witnessing in Ukraine. Canada needs to get up to speed with this technology and according to the corporate marketing blurbs it is supposed to be happening, although at a choppy pace. I know it's a small cap with the inherent risks. What do you think? Can the Federal defense dept. get their act together and help to nurture this important industry sector?
5i Research Answer:
We are not sure we can't count on any government LOL. FLT has a sales base ($55M expected this year) and is not restricted to Canada. It has a decent balance sheet and has one recent contracts. With some support, it will be able to grow its backlog. Valuation is high, with a market cap already $414M. Insiders own 21% and are committed. The stock has done very well, largely due to the sector moreso than financials. Cash flow remains negative. There are few alternatives for Canadian investors, so if the sector stays strong we would expect continued interest. But it should be viewed as expensive, and speculative.