Up 45% in 3 weeks, is the DroneShield share price super rally back on?

The DroneShield Ltd (ASX: DRO) share price is leaping higher today despite the broader stock market selling action.

Shares in the All Ordinaries Index (ASX: XAO) drone defence company closed on Friday trading for $1.33. In early afternoon trade on Monday, they are swapping hands for $1.42 apiece, up 7.3%.

For some context, the All Ords is down 0.3% at this same time.

As you can see on the above chart, today's intraday gains see the DroneShield share price up an eye-popping 44.9% since the stock's recent low of 97.5 cents on 7 August.

As you can also see, despite that big three-week surge, the ASX All Ords drone defence stock remains down 45% from its record closing high of $2.60 a share. That record was notched on 15 July.

But longer-term shareholders should be sitting pretty.

Twelve months ago, you could have snapped up shares for just 28 cents each. Meaning the stock is up a whopping 400% at current levels. Or enough to turn a $5,000 investment into $25,000 in just one year.

Which brings us back to our headline question.

Is the DroneShield share price rally back in play?

DroneShield's big fall from the record highs in mid-July came after analysts questioned the company's soaring valuation. Indeed, at $2.60 a share, Droneshield's market cap had grown to $2 billion.

The All Ords stock came under additional selling pressure following a capital raise, conducted at a 17% discount to the prior trading day's closing price.

However, the last three weeks indicate that the market sees ongoing growth for the company, potentially rekindling the DroneShield share price super rally, though not without plenty of volatility.

Just last week, for example, shares closed down 8.2% on Tuesday following the company's half-year results, only to rebound 9.8% on Wednesday, slip 3.9% on Thursday, and surge 7.3% on Friday.

So, not a stock for the weak-hearted!

As for those half-year results, the company reported record revenue of $24.1 million, up 110% year over year, while net losses increased to $4.8 million from $2.9 million.

The balance sheet looks strong post-capital raise, with DroneShield holding a cash balance of $230 million with $32 million in the contracted backlog.

Like it or not, the world needs drone defences

As for whether the DroneShield share price can continue to rally, I believe it can.

Though it's unreasonable to expect 44% gains every three weeks moving forward!

But, like it or not, governments the world over are increasingly turning to drones to protect their own assets and target those of their enemies.

Over the weekend, reports again emerged of a "massive drone strike" launched by Ukraine to target Russia's oil and energy infrastructure. And we're seeing similar hostile drone activity in the Middle East conflict.

As DroneShield stated last week:

The conflicts in Ukraine, Middle East and elsewhere globally are demonstrating the role of drones in modern warfare and driving procurement programs of government customers around the world seeking to be prepared for the next conflict.

Until wiser and calmer heads prevail, I believe DroneShield shares can continue to outperform amid fast-rising global demand for its defence products.

The post Up 45% in 3 weeks, is the DroneShield share price super rally back on? appeared first on The Motley Fool Australia.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. 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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