Kratos Defense a Stock with Potential for Explosive Growth and ARK Invest Favorite
ARK Invest 3rd largest investor in Kratos Defense & Security
Kratos Defense claims it can replace manned fighter jets, with armed combat "drones" that can do everything a jet fighter-jet can at a fraction of the cost. (and without loss of life!)
Innovation & Disruption
That is why Kratos Defense & Security Solutions (NASDAQ:KTOS) is the most exciting story in the defense industry today. When you see real innovation and disruption, you will find Cathie Wood and her team. Kratos has become a favorite among ARK Invest and its fans (mostly retail investors). ARK Invest bought KTOS shares every other day in June 2021.
Kratos Defense is the third largest holding in the ARK Space & Exploration ETF (ARKX) and the fourth largest holding in the ARK Autonomous Technology & Robotics ETF (ARKQ). Overall, ARK Invest is the third largest investor in KTOS with almost 7 million shares behind Vanguard and Blackrock Fund Advisors. Kratos Defense is a small but up-and-coming innovator in the aerospace & defense sector - specializing in autonomous systems and satellite / space communications.
ARKQ holdings in KTOS ¹
| Company | Shares | Mkt Value | Weight |
|---|---|---|---|
| KTOS | 8.3 million | 195 million | 6.73% |
¹ Current stock price for KTOS is $28.30 with a target forecast of $45. The top ten holders of KTOS are a list of well-known institutional investors.
1. The Vanguard Group, Inc.
2. BlackRock Funda Advisors
3. ARK Investment Management LLC
4. SSgA Funds Management, Inc.
5. Capital Research & Management Co.
6. Fidelity Management & Research Co.
7. T. Rowe Price Associates, Inc.
8. BAMCO, Inc.
9. Neuberger Berman Investment Advisors
10. Stephens Investment Management Group
ARK OUTLOOK FOR KTOS: STOCK DOUBLES IN 5 YEARS
The two ARK Invest ETFs (ARKQ and ARKX) hold 6.73% of KTOS's outstanding shares as of the end of Q2, 2021. The ARK's investment philosophy is to invest in companies that deliver a minimum of 15-20% CAGR (compounded annual growth rate) or double within 5-years.
KTOS is expected to hit or exceed that target by ARK. You can follow ARK’s buys and sells to see if KTOS continues to shine in their portfolio and adjust your trades. ARK will sell companies that lose the edge. As an active ETF, ARK publishes its trades daily for complete transparency. Follow this link to sign up for ARK trade notifications here — to receive a spreadsheet of each day’s trades.
BIG OPPORTUNITY: Tactical Autonomous Unmanned Drones
An exciting development going forward is the on-going evolution of Kratos' unmanned drones. The company's autonomous Valkyrie jet drone shown below is flying in formation with a A U.S. Air Force F-22 Raptor and F-35A Lightning II. These autonomous drone, able to team up with piloted aircraft, could be operational by 2023 according to Brig. Gen, Heather Pringle.
Tactical drones like the Valkyrie could transform Kratos as a company and make it a acquisition target for larger defense and aerospace companies.
A USAF-22 Raptor and F-35A Lightning II fly in formation with the XQ-58A Valkyrie low-cost unmanned aerial vehicle over the U.S. Army Yuma Proving Ground testing range, Ariz., during a series of test flights December, 2020
Recent Kratos News
Kratos Defense & Security Solutions announced that its Defense & Rocket support Services (DRSS) Division has received a contract from the Navy Surface Warfare Center Port Hueneme Division, White Sands Detachment to develop a hypersonic, experimental test vehicle to perform flight tests for the maturation of high-speed flight technology for missile defense and hypersonic research.
In other news the Air Force’s AI-based Skyborg ‘brain’ successfully flew a General Atomics MQ-20. The first flight of the Skyborg Autonomous Control System (ACS) took place April 29 aboard a Kratos UTAP-22 Mako. The Skyborg program is also a key part of the service’s plans for All Domain Operations, with teaming between piloted and un-piloted aircraft via real-time communications seen as foundational to defeating advanced Chinese and Russian air defense systems.
Kratos Mako (UTAP-22) Unmanned Tactical Aerial Platform
“ “Superior maneuverability and payload versatility - the ultimate wingman for high-performance manned / unmanned teaming operations in contested airspace””
Skyborg could reach initial operating capability (IOC) as early as 2023.
The Air Force in December announced 24-month contracts for three Skyborg competitors: Boeing, for $25.7 million; General Atomics Aeronautical Systems Inc., for $14.3 million; and Kratos Unmanned Aerial Systems Inc., for $37.8 million.
Space Communications News at KTOS
Kratos completed a major milestone in build-out of Advanced Space Radio Monitoring System for the Communications Regulatory Authority (CRA) of the State of Qatar. The successful Critical Design Review accelerates path to production and testing. This successful program will be able to be duplicated for other countries with an incremental revenue stream to US defense contracts.
TAKE-OVER CANIDATE?
Kratos' expertise could make it a takeover target from the largest companies in the aerospace industry all who have extensive space operations and ambitions. LMT, Boeing, and Raytheon could be potential buyers of KTOS's technology.
IN THE END — FINAL THOUGHTS
Kratos is a longer-term investment with growth potential in the space and autonomous drone markets along with space communications. With the increase interest in space due to SpaceX, Blue Origin and Virgin Galactic, Kratos is likely to see significantly higher demand for their systems and products outside of military contracts. Kratos will continue to be a leader in the autonomous drone and communications technology. Watch ARK Invest to keep tabs on Kratos, buy when ARK does use caution when you see sells. Kratos Defense looks to be a good addition to a portfolio that understands the upside of innovation and disruption but understand there is always added risk with new ideas & innovation companies.
All investment strategies discussed are for informational purposes only and can involve risk or loss. Nothing contained in this website should be construed as investment advice.
