Difficult to suggest stock ideas in this volatile market – but this kind of market can be an opportunity to get great stocks at fair or cheap prices.
Drones are becoming more prominent in the military with their fearsome designs and are made by Boeing.
DJI a Chinese drone maker also makes drones for home use or commercial use – not sure how the FAA will control use of these strange looking flying machines but they could certainly revolutionise things like home delivery and put the newspaper boy out of work!
These drones need advanced cameras – and Ambarella makes chips for advanced cameras used by DJI and GoPro.
The stock went on an amazing run following Q1 results – but has fallen back sharply due to the timing of the GoPro product releases and a weaker outlook for the next quarter – listen to the Q2 conference call.
2CentView FV = $62 on $AMBA – so the $73 stock price – although still rich to the Fair Value, the stock is in a real potential growth area and if you think the Q2 was a one off, could rally back to $100 – close to the consensus analyst target price.
If you want to get exposure to the non-Military Drone market (and GoPro) then buy Ambarella.
Trade: Buy here at $73 (20% 5Y Implied growth rate), Target $100, stop $58.
$GPRO FV = 40
$BA FV = 120 (boeing)