DroneShield Ltd (ASX: DRO) has become one of the ASX’s most closely watched growth shares.

The opportunity is substantial, but this is still a company where investors need to be comfortable with plenty of uncertainty along the way.

So, would I buy the shares and hold them for the long term?

Counter-drone technology has become increasingly important

The first reason I am positive on DroneShield is the problem it is trying to solve.

Small drones are now being used extensively in modern conflicts, while governments are also thinking more seriously about protecting airports, military bases, critical infrastructure, and other sensitive locations.

That creates demand for technology that can detect drones quickly and, when appropriate, stop them.

DroneShield specialises in this area. Its products use radio-frequency sensing, artificial intelligence, electronic warfare, and other technology to identify and respond to drone threats.

I think its focus is an important strength.

DroneShield has spent years developing specifically for the counter-drone market rather than treating it as a small part of a much larger defence business. I think that experience could become increasingly valuable as customers look for technology that has already been tested and can continue adapting as drones change.

The technology keeps moving forward

Another reason I would be comfortable holding DroneShield is that the company is not relying on one successful product.

Drone threats are changing quickly. New drones can use unfamiliar frequencies, move faster, and try to avoid existing detection methods.

DroneShield has been responding with regular software and hardware development. Its recently released RfAI-3 technology is designed to identify previously unseen drones rather than depending entirely on a catalogue of known signals.

It has also recently launched RfRecon, a portable system that helps military and security users understand activity across the radio-frequency environment.

I like this because it shows the opportunity extends beyond simply selling more of the same equipment.

If DroneShield can keep improving the technology already deployed with customers while developing new products around their needs, it could build much deeper relationships over time.

It is preparing for a much larger business

Manufacturing is another part of the story I think investors should watch closely.

There is little value in winning major defence orders if a company cannot produce enough equipment to fill them.

DroneShield has been investing heavily to increase its manufacturing capability in Australia, while also establishing production in Europe. Its first European-produced counter-drone system came off the production line earlier this year.

That gives the company more capacity to pursue larger programs while also bringing production closer to important overseas customers.

For me, that is an encouraging sign that management is building the business for a much greater level of demand than it has historically served.

I would still treat this as a high-risk investment

This is where I would be careful.

Defence orders can be large and unpredictable, procurement processes can take time, and future revenue may not arrive smoothly from one period to the next.

Competition is another consideration. The counter-drone opportunity is attracting major defence companies and specialist technology businesses around the world.

DroneShield also needs to keep investing rapidly enough to stay ahead as drone technology evolves.

That means I would be much more comfortable holding DroneShield as a relatively small part of a diversified portfolio than making it one of my largest investments.

Foolish takeaway

For an investor with a high tolerance for risk, I think DroneShield shares are worth buying and holding.

What keeps me interested is the possibility that counter-drone technology becomes a much larger and more permanent part of defence and security spending around the world.

DroneShield has already spent years developing specialist technology and is now building the manufacturing footprint needed to compete for bigger opportunities.

There could be plenty of volatility between here and there. But with a long timeframe and sensible position size, I think the potential reward makes that risk worth considering.

The post Are DroneShield shares worth buying and holding? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in DroneShield. 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.

Reece Ltd (ASX: REH) shares are heading south on Monday after the plumbing products group released its FY26 results.

At the time of writing, the Reece share price is down 5.62% to $15.61. By comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.3% higher to 9,090 points.

The company reported higher revenue for FY26, although profit slipped. Reece also lifted its final dividend, giving shareholders some good news despite the drop in the bottom line.

So, does the result make Reece shares worth buying?

Let’s take a closer look.

Reece lifts its final dividend 13%

Reece declared a fully-franked final dividend of 13.40 cents per share.

That is almost 13% higher than the 11.86 cents per share paid a year earlier.

Combined with the 5.44-cent interim dividend, Reece will pay total dividends of 18.84 cents per share for FY26. That’s up 2.6% from 18.36 cents in FY25.

At the current share price of $15.61, the full-year payout gives Reece shares a trailing dividend yield of around 1.2% before franking credits.

Reece shares will trade ex-dividend on 6 October, with the record date on 7 October. The final dividend will then be paid on 21 October.

What did Reece report?

For the 12 months ended 30 June 2026, Reece reported sales revenue of $9.38 billion, up 4.5% from the previous year.

EBITDA was flat at $901 million, while EBIT fell 2.6% to $534 million. Net profit after tax (NPAT) declined 2.8% to $308 million.

Earnings per share (EPS) still increased 0.7% to 49.5 cents.

The Australian and New Zealand business was the stronger part of the result. Sales rose 8.3% to $4.2 billion, while EBITDA increased 7.3% to $532 million as volumes recovered.

Nonetheless, conditions were tougher across the US business. Sales increased 6.5% in US dollar terms, but EBITDA fell 4.5% as weak residential construction weighed on demand.

Reece also continued investing in its US network, opening 25 new branches during the year.

Are Reece shares a buy?

There were some positives in the result, particularly the recovery in Australia and New Zealand and the higher final dividend.

Management expects that momentum in ANZ to continue into FY27, helped by a solid pipeline of activity.

However, the US outlook remains less certain. Reece expects only modest growth there while residential new construction remains weak.

Investors also need to consider the price they are paying.

At $15.61, Reece shares are trading at around 32 times FY26 earnings. That’s not cheap for a company that reported lower profit for the year and is still dealing with a weak US housing market.

And while the dividend increase is a positive, the 1.2% trailing yield is unlikely to attract investors looking mainly for income.

The post Reece shares sink despite dividend boost. Is it a buy? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

Nuix Ltd (ASX: NXL) shares are starting the week with a bang.

Shares in the All Ordinaries Index (ASX: XAO) investigative analytics and intelligence software provider closed on Friday trading for $1.425. In morning trade on Monday, shares are swapping hands for $1.80 apiece, up 26.3%.

For some context, the All Ords is up 0.2% at this same time.

This strong outperformance follows the release of the ASX tech stock’s full year FY 2026 results.

Here’s what stoking investor interest.

Nuix shares surge on return to profit

The ASX All Ords tech stock enjoyed a strong year of growth.

Highlights included an 18.8% year-on-year increase in revenue to $263.2 million. The company credited this to broad-based expansion through both existing customer growth and new customer wins.

And earnings rocketed too. Nuix shares are getting a lift, with the company reporting adjusted management earnings before interest, taxes, depreciation and amortisation (EBITDA) of $59.8 million, up 60.4% from FY 2025, with margins increasing to 22.7% from 16.8% last year.

This helped drive a 154% year on year increase in the company’s underlying cash flow to $51.0 million.

On the bottom line, Nuix swung back into profit, achieving a statutory net profit after tax (NPAT) of $16.4 million, up from a $9.2 million loss in FY 2025.

Tapping into AI

Nuix shares could also get longer-term support from the company’s investments in AI across its operations.

“Shifts in enterprise AI deepen Nuix’s defensive moat and provide revenue opportunities,” the company said.

Nuix noted that its approach to AI adoption is designed to “scale capacity rather than reduce headcount”.

What did management say?

Commenting on the results lifting Nuix shares today, CEO John Ruthven said, “FY26 was a year of profitable growth and decisive action.”

Ruthven added:

Financial performance was robust across key metrics, with ACV [Annualised Contract Value] within our guided range, material increases in profitability and a substantial lift in cash generation. Nuix Neo continues to scale as the primary engine of profitable growth.

During the year, we made the structural changes required to shift from feature selling to platform value. We have restructured our go-to-market with enhanced commercial capability, established a clear AI strategy, and unified product and technology, backed by a one-off R&D Accelerator investment in FY27.

Looking to what could impact Nuix shares in the year ahead, Ruthven said:

We are building on continued underlying momentum. With enhanced commercial capability in place, continued investment in platform and AI capabilities, and a clear strategy for profitable growth, we are well positioned to capture the significant opportunity ahead.

The post Why are Nuix shares rocketing 26% on Monday? appeared first on The Motley Fool Australia.

More reading

• Nuix share price on watch amid robust FY26 earnings and platform growth

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 no position in any of the stocks mentioned. 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.