We recently published a list of Jim Cramer Latest Portfolio: 10 Stocks to Buy and Sell. Since AeroVironment, Inc. (NASDAQ:AVAV) ranks 7th on the list, it deserves a deeper look.
Jim Cramer in his latest program talked about how the China factor is affecting US stocks. He said that companies that have exposure to China are getting hammered and he does not see that changing “anytime soon.”
Cramer said that currently there are many “pernicious forces working against the bulls.” The CNBC host said many growth stocks are declining right when interest rates are around the corner. He said that companies that don’t benefit from rate cuts are going down. Cramer also mentioned weak earnings reports which show companies having challenged client bases. Cramer mentioned a consumer products company that was recently hammered because of weakness in China.
Cramer thinks the problem in China is twofold: there’s a government that does not like America or American businesses while the population is “cash-strapped” even if they “like our country.”
Cramer said “China is so darn complicated.” He said at one point the Chinese government was “so business friendly” that Western companies thought it’s “insane” not to go there. But since the Trump administration, the country has been engaged in trade wars with the US.
Cramer said the Chinese government “took advantage of us on trade.”
For this article we watched several latest programs of Jim Cramer and picked 10 important stocks he’s talking about. With each stock we have mentioned its hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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AeroVironment, Inc. (NASDAQ:AVAV)
Number of Hedge Fund Investors: 20
When asked about AVAV during a latest program, Cramer said people keep telling him the stock is “way too expensive and it has to come down versus the price of Iranian drones.”
“All I know is their drones work and therefore it’s a buy.”
AeroVironment, Inc. (NASDAQ:AVAV) is a defense contractor that makes unmanned aerial vehicles. AVAV shares are up about 41% so far this year, thanks to geopolitical tensions worldwide that have caused the company to double its sales from 2020 to 2024 to nearly $750 million. The company has three business segments: Loitering Munitions (LMS), Uncrewed Systems (UxS), and MacCready Works (MW). While competition is rising in the industry, AeroVironment, Inc. (NASDAQ:AVAV) moat is strong because of its strong R&D spending in innovation that has made its drone reliable. Governments need reliability as compromised data links, unreliable GPS systems could result in destructive defeat for militaries.
Despite the latest pullback in share price following a softer fiscal Q4 earnings report and rival Anduril Industries winning a $300 million contract from the US government, AeroVironment, Inc. (NASDAQ:AVAV) trades at around 50x forward earnings. This valuation is not outlandishly high amid the growth prospects of the AV industry and about a 19% revenue growth estimate set by Wall Street for the company for 2025.
Overall, AeroVironment, Inc. (NASDAQ:AVAV) ranks 7th on Insider Monkey’s list titled Jim Cramer Latest Portfolio: 10 Stocks to Buy and Sell. While we acknowledge the potential of AeroVironment, Inc. (NASDAQ:AVAV) our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AVAV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
