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 Vertical Aerospace Ltd. (NYSE:EVTL) 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 prototype of the company’s electric vertical take-off and landing vehicle, hovering above the runway.
Vertical Aerospace Ltd. (NYSE:EVTL)
Market Capitalization: $645.35 Million
No. of Hedge Fund Holders: 9
Vertical Aerospace Ltd. (NYSE:EVTL) is a United Kingdom-based global aerospace and manufacturing company engaged in the eVOTL business. The company focuses on designing, manufacturing, and selling zero-operating emission eVTOL aircraft. The company is targeting to sell its flagship eVTOL, the VX4, for use in the advanced air mobility (AAM) market. The VX4 has undergone the initial stages of its flight test campaign as the company advances into the next stage.
Vertical Aerospace Ltd. (NYSE:EVTL) recently announced $50 million in funding by Mudrick Capital. The company will receive a $25 million upfront funding and an additional $25 million backstop. Vertical Aerospace continues to add capital investment to fuel its research and development for the VX4 aircraft and expand testing and certification capacities.
On January 23, Canaccord Genuity analyst Austin Moeller revised the price target from $13.50 to a previous $16 target. The analyst maintains a Buy rating on the stock and the price target still reflects an upside of 55% from the current price level. Analysts have cut the price following the company’s aggressive capital raises to support its VX4 aircraft project. Analysts believe that the company has significantly mitigated financial risk for itself. However, they remain bullish on the company’s ability to achieve certification for the VX4, which is anticipated in 2028.
Overall, EVTL ranks 2nd on our list of best small-cap drone stocks to buy now. While we acknowledge the potential of EVTL 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 EVTL 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.
