Honeywell International Inc. (HON): A Top Pick for Military Drone Investing

We recently released a list of the 10 Top Military Drone Stocks to Invest in Currently In this piece, we'll examine how Honeywell International Inc. (NASDAQ:HON) measures up against top contenders in the drone stock market.

Contemporary warfare is swiftly transforming beyond the traditional realms of infantry, armored vehicles, and combat aircraft. Large formations of unmanned aerial vehicles (UAVs), controlled by artificial intelligence, dominate the airspace and have the capability to precisely attack adversary positions. This shift in war tactics has merged human roles with technological advancements, necessitating an overhaul of military strategies and capacities.

READ ALSO: 10 Nations Boasting the Highest Number of Military Drones Worldwide and Goldman Sachs' Recommended Defense Stocks: Leading 12 Choices .

In recent years, there has been a significant increase in the demand for drones as various nations utilize Unmanned Aerial Vehicles (UAVs) extensively for gathering intelligence, conducting reconnaissance missions, performing surveillance activities, and executing targeted operations. These airborne systems provide an unparalleled overhead perspective of combat zones, complicating movement and concealment efforts for adversaries within these areas.

In the 2020 conflict over the Nagorno-Karabakh region involving Azerbaijan and Armenia, drones emerged as a significant element. These unmanned aircraft have also loomed over various towns and cities throughout the ongoing Russia-Ukraine war, marking what some military analysts view as an introduction of a novel challenge in air defense strategies.

For nearly a hundred years, the U.S. has utilized unmanned aerial vehicles, starting with their deployment during World War II and most recently during conflicts in Afghanistan and Iraq. In 2023, the Department of Defense (DoD) introduced Replicator, aimed at producing 'attritable autonomous systems' en masse within the coming 18 to 24 months. Additionally, the Air Force is working on drone wingmen designed to accompany its fighter and bomber aircraft through the Collaborative Combat Aircraft (CCA) program. Two initial models of these CCA fighters made their debut earlier this year in March.

Nonetheless, specialists in defense consider the increasing availability of unmanned aerial vehicles (UAVs) as a security concern, particularly because U.S. forces face growing attacks from non-state entities in the Middle East. Additionally, officials in Washington are concerned that China might take inspiration from Russia’s playbook during the Ukraine conflict and initiate comparable assaults on American assets within the Asia-Pacific region.

A significant amount of effort is being directed towards protecting nations from the dangers presented by unmanned aerial vehicles (UAVs). In October 2024, the Department of Defense (DoD) granted a $250 million contract to Anduril Industries for developing systems to thwart drone assaults on U.S. troops. As part of this agreement, the country will obtain 500 recuperable Roadrunner interceptors—drones designed to be reused that can either neutralize approaching drones or safely return to the ground if they do not engage their targets.

Given this, let’s move on to the lineup of the top drone stocks worth purchasing.

Methodology

We drew samples from ETFs that have investments in military drones, complemented by insights from our earlier pieces on this topic. Our selection encompassed both companies exclusively focused on manufacturing military drones and larger defense firms involved in drone initiatives. Next, out of these picks, we chose the top 10 stocks which attracted the most hedge fund backers, according to Insider Monkey’s repository covering more than 1,000 major hedge funds up until Q4 2024.

Why do we focus on the stocks that hedge funds accumulate? It's straightforward: our analysis indicates that mimicking the top stock choices from leading hedge funds allows us to surpass market performance. Each quarter, our newsletter recommends 14 small-cap and large-cap stocks using this approach, delivering an impressive return of 373.4% since May 2014, which significantly exceeds its benchmark by 218 percentage points. see more details here ).

Honeywell International Inc. (NASDAQ: HON )

Number of Hedge Fund holders: 67

Honeywell International Inc. (NASDAQ:HON), an all-encompassing operational enterprise, assists entities in tackling their toughest issues within aerospace, automation, and the shift towards renewable energies. The firm holds a significant position in the military drone sector.

In October 2024, Honeywell International Inc. (NASDAQ:HON) joined forces with Merlin Labs to introduce automation across various types of aircraft, such as military units. As per their accord, Honeywell Anthem’s sophisticated flight control systems will be merged with Merlin’s autonomous piloting technology to lessen the workload for pilots when undertaking complex operations.

At the end of last year, Honeywell International Inc. (NASDAQ:HON) declared a strategic partnership with Near Earth Autonomy to back initiatives for autonomous rotorcraft programs. These firms plan to collaborate first with Leonardo to compete in the US Marines' Aerial Logistics Connector (ALC) prototype project.

On February 26, Honeywell International Inc. (NASDAQ:HON) revealed plans to split Automation and Aerospace Technologies from its operations, along with the earlier disclosed move to divest Advanced Materials. This restructuring aims for completion sometime between July and December 2026, leading to the formation of three independent public entities, each possessing unique growth prospects and strategic directions.

Based on Insider Monkey’s Q4 2024 database, 67 hedge funds owned shares in Honeywell International Inc. (NASDAQ:HON), indicating it as one of the top picks among drone-related investments.

Overall, HON ranks 3rd Among the top 10 best military drone stocks to consider right now, we recognize their appeal. However, we're convinced that AI stocks have even greater potential for providing substantial returns over a shorter period. One particular AI stock has surged since the start of 2025, whereas many well-known AI stocks saw losses close to 25%. Should you be interested in an AI stock with better prospects than HON yet trading below five times its earnings, explore our detailed report on this opportunity. cheapest AI stock .

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Disclosure: None. This piece was initially published at Insider Monkey .