Electro Optic Systems (ASX: EOS) $8.59

EOS is a very different investment proposition to DroneShield. Revenue has been far more volatile, fluctuating between $128 million and $219 million over the past five years as the business remains heavily reliant on winning large government contracts. FY25 was particularly challenging, with revenue falling to $128 million and earnings (EBITDA) declining to a $24 million loss, highlighting that the company has yet to establish consistently profitable operations.

The investment case moving forward hinges on execution and contract wins. Consensus expects revenue to more than double to $278 million in FY26, before climbing above $500 million by FY28, alongside a return to positive EBITDA. While that offers meaningful upside if contract wins materialise, it also leaves little room for disappointment. Unlike DroneShield, which has already demonstrated a clear revenue and earnings inflection, EOS remains a higher-risk $1.9bn turnaround story that must prove it can convert its pipeline into sustained profitable growth.

We last wrote about EOS in June here, concluding we weren’t excited by the risk/reward ~$10.30, a good call in hindsight with the stock subsequently plunging over 40%. After bouncing back to the $8.50, we’re still concerned that an almost $2bn company is struggling to make money while it enjoys meaningful tailwinds from the likes of Trump, Ukraine and Iran.

• We wouldn’t be surprised to see EOS test $5 and $10 into Christmas; it’s still a trading as opposed to investing stock to us.