Why This Top Drone Stock Could Surge Again After Its Big Drop

In-line with my previous predictions, Kratos (KTOS) stock first rallied and then fell a great deal since my last column on the name was published on March 6. But with the stock’s valuation significantly more reasonable than was the case in early March and the company enjoying several very strong, positive catalysts, growth investors should consider buying KTOS stock at this point.

However, investors should realize that the company is facing a few meaningful risks.

After KTOS Stock Fell as Expected, Its Valuation Is Much More Reasonable

In my March 6 article, I suggested that the name would climb in the shorter term due to the Iran war and then fall as the conflict wound down. That scenario did indeed play out, as the shares rose from $87 as of the market close on March 6 to $95.31 as of the market close on March 17. And on May 8, KTOS finished at $57.89.

As a result of the decline, the stock’s valuation, although still quite elevated, is much more palatable. As of May 8, the shares had a forward price-earnings ratio of 149 times, down from 167 times at the beginning of March and from 182 times as of the end of September.

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