Investors returned to DroneShield Ltd (ASX:DRO, OTC:DRSHF) on Tuesday, ending a seven-session slide in one of the ASX’s standout performers this year. The defence stock was up 10.6% at 1:30pm to $4.94, taking its year-to-date gain past 500% as governments ramp up spending on counter-drone capabilities.
Morgan Stanley broker data this week showed DroneShield among the most sought-after stocks by retail investors on a dollar-turnover basis, alongside lithium names Pilbara Minerals and Mineral Resources and buy now, pay later group Zip.
Still, valuation concerns persist. Atlas Funds Management chief investment officer Hugh Dive told the AFR on Monday that DroneShield was trading on a price-to-earnings multiple of 468, which he called “insane”. “Everything has to go right for a long time to justify an entry price when the PE is in the 100s,” he said.