We recently published a list of 7 Best Small-Cap Drone Stocks to Buy Now. In this article, we are going to take a look at where Archer Aviation Inc. (NYSE:ACHR) stands against other best small-cap drone stocks to buy now.
Drones are the strategic weapon in modern warfare and we have experienced the use of high-end drone technology in the Iran-Israel and Russia-Ukraine wars. Drones or unmanned aerial vehicles (UAV) were also prominent in the 2020 conflict between Azerbaijan and Armenia.
READ ALSO: 8 Best Military Drone Stocks to Buy According to Analysts.
Drones are not only used in military applications but have become popular in amateur photography, videography, and logistics. Drone technologies continue to improve and emerge, for instance, the U.S. Department of Defense is currently investigating the development of uncrewed vehicles that use AI through its Replicator initiative. Vertical takeoff and landing (VTOL) autonomous aircraft are gaining popularity in the military. VTOL autonomous vehicles provide various features for military purposes including ISR to search and rescue.
According to a report from MarketsAndMarkets, the global drone industry was valued at $30.2 billion in 2024 and is projected to cross $48.5 billion in 2029, growing at a compound annual growth rate (CAGR) of 9.9%. Whereas, the UAV volume is expected to rise from 5.42 million units in 2024 to 7.51 million units in 2029.
Drone stocks remain an attractive investment option for investors as the industry continues to expand. However, not only publicly traded companies present investment opportunities, exchange-traded funds (ETFs) are also a notable option. Two major drone ETFs: SPDR S&P Aerospace & Defense ETF and iShares US Aerospace & Defense ETF returned over 38% and 27% in 2024, outperforming the broader market. Apart from established players in the drone sector, investors have a variety of emerging small-cap stocks to explore.
Our Methodology
We shifted through stocks that were involved in the drone business with a market capitalization between $200 million and $5 billion, as of January 23. We then selected the 7 best small-cap drone stocks based on hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024. The best small-cap drone stocks are ranked in ascending order of their hedge fund holdings.
Why do we care about what hedge funds do? 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).
A technician assembling an electric aircraft, highlighting the company’s manufacturing capabilities.
Archer Aviation Inc. (NYSE:ACHR)
Market Capitalization: $4.90 Billion
No. of Hedge Fund Holders: 23
Archer Aviation Inc. (NYSE:ACHR) is an aerospace company focused on the design and development of eVTOL aircraft. The company is expanding its network globally with new agreements and new facility installations. Archer Aviation recently signed a partnership with the aviation sector in Abu Dhabi to serve as the primary eVTOL aircraft manufacturer for the Emirate’s planned electric air taxi operations. Archer has become the first eVTOL manufacturer to establish manufacturing capabilities in the United Arab Emirates. The company has also received approval to install a manufacturing facility in Covington, Georgia, which will be able to produce 650 aircraft annually by 2030.
In the third quarter of 2024, the company achieved key partnerships and manufacturing expansions to drive growth. The company’s collaboration with industry leaders including Stellantis provides a robust financial backing for manufacturing growth. Stellantis has committed up to $400 million in additional capital to the company.
Archer Aviation Inc. (NYSE:ACHR) is targeting key markets in the U.S., Middle East, and Asia, supported by government backing. The company has a pre-order backlog of approximately $6 billion, including pre-delivery payments, reflecting strong market interest.
Overall, ACHR ranks 1st on our list of best small-cap drone stocks to buy now. While we acknowledge the potential of ACHR to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ACHR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
