Flying cars, also known as electric vertical take off and landing (eVTOL) vehicles, were in the thick of the action last year. The primary reason for this increased interest was regulatory approvals that are likely to set the stage for commercialization by 2025. But after a good rally, some of the top companies in the space have been in a correction and consolidation mode. This means they could offer opportunity as some of the best undervalued flying car stocks on the market right now.
An important point to note is that most flying car companies are in an early-growth stage. Considering the market potential over the next decades, the best part of the rally is still to come. Therefore, it’s a good time to accumulate undervalued flying car stocks for multibagger returns.
Highlighting the market potential, Morgan Stanley estimates that the flying car market will be worth $1 trillion by 2040. By 2050, the market size will swell to $9 trillion. Further, between 2022 and 2030, the market is expected to grow at a compound annual growth rate (CAGR) of 37%, from $74.2 million to $920.5 million. These numbers put into perspective the impending growth potential for flying car stocks.
EHang Holdings (EH)
EHang Holdings (NASDAQ:EH) stock has witnessed correction and consolidation after a big rally in the first half of 2023. With short interest around 20%, a short-squeeze rally for the stock could be driven by fundamental developments.
After its approval from the Civil Aviation Administration of China, the company completed debut commercial flight demonstrations in Guangzhou and Hefei. The Hefei Municipal Government will also be purchasing 100 EH216 series pilotless aerial vehicles for a consideration of $100 million. The company is expected to make bigger inroads in the Chinese market in the next few years.
At the same time, EHang has been conducting trial flights in Asia and Europe. EHang has completed 39,000 demo flights in 14 countries. It’s likely that global expansion will be aggressive once regulatory approvals come. As the company positions itself for stellar growth between 2025 and 2030, EH stock currently seems like one of the undervalued flying car stocks that investors should be paying attention to.
Archer Aviation (ACHR)
After a strong rally in the first half of 2023, Archer Aviation (NYSE:ACHR) stock has remained sideways in the last six months. With plans for commercialization of eVTOL vehicles in the United States in 2025, Archer looks poised for considerable returns, making it another one of the currently undervalued flying car stocks investors should investigate.
In terms of the next 36 months, the company’s plans look exciting. Archer Aviation expects to commence “for credit” testing with the Federal Aviation Authority (FAA) this year, with commercialization in 2025. Further, Archer will enter the United Arab Emirates and India in 2026 through partnerships.
It’s worth noting that Archer has a backlog of $142 million from the U.S. Air Force. The backlog has swelled with an order from Air Chateau International worth $500 million. Archer is also well financed. As of Q3 2023, Archer reported a liquidity buffer of $600 million. Additionally, the backing of some big investors underscores the company’s credibility and growth potential.
Joby Aviation (JOBY)
Joby Aviation (NYSE:JOBY) is another attractive pick among undervalued flying car stocks. In December, Joby announced a partnership with ANA Holdings (OTCMKTS:ALNPY) and Nomura Real Estate Development to develop vertiports across Japan. This will serve as a “backbone of future commercial air taxi services.”
In the United States, the company’s certification from the FAA is 84% complete as of Q3 2023. The company has also completed the first delivery of its electric air taxi to the U.S. Air Force. This is a part of a $131 million contract.
Joby Aviation ended Q3 2023 with a liquidity buffer of $1.1 billion. The company’s first production facility in California has been provided with total benefits of $325 million from state and local agencies, implying the company should not have any current financial concerns.
Clearly, business development has been positive even as the stock remains sideways to lower. This could indicate an upcoming strong reversal rally, making it another top choice for currently undervalued flying car stocks.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
