3 Next-Gen Aviation Stocks With Stratospheric Potential

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  • Next-gen aviation stocks offer significant growth potential as the industry is projected to skyrocket in the next five years.
  • Archer Aviation (ACHR): The company is developing eVTOL aircraft for urban air mobility with strong progress and liquidity.
  • Lockheed Martin (LMT): This well-known name in aviation builds hypersonic weapons and aircraft and has strong financial performance.
  • Leidos Holdings (LDOS): Participating in hypersonic programs for the U.S. Department of Defense, Leidos has impressive revenue growth.
next-gen aviation stocks - 3 Next-Gen Aviation Stocks With Stratospheric Potential

Source: shutterstock.com/Pasuwan

The revival of supersonic travel is on the horizon, with several companies developing aircraft capable of significantly reducing travel time across continents. This innovation could redefine long-haul travel, so investors should keep an eye on next-gen aviation stocks.

The global market for commercial aircraft next-gen avionics is expanding. These advanced systems include state-of-the-art flight management systems, synthetic vision and improved communication and navigation tools. The market, currently valued at $5.33 billion, is projected to grow at a compound annual growth rate (CAGR) of 6.84% over the next five years​.

Now is a great time for investors to consider adding these next-gen aviation stocks to their portfolios. All of these companies have impressive growth trajectories and are backed by solid order books and cheap valuation ratios. But time may be of the essence for investors, as these next-gen aviation stocks may not stay cheap for long.

Archer Aviation (ACHR)

Person holding mobile phone with web page of US eVTOL aircraft company Archer Aviation Inc. (ACHR) on screen with logo. Focus on center of phone display. Unmodified photo. Archer Aviation Stock Analysis
Source: T. Schneider / Shutterstock.com

Archer Aviation (NYSE:ACHR) is developing electric vertical takeoff and landing (eVTOL) aircraft aimed at enhancing urban air mobility. The company has strong potential based on the progress it is making with its Midnight eVTOL aircraft program.

The company has also made significant strides in the development and testing of Midnight’s critical systems. Passing rigorous testing is crucial for safety of flight readiness and supports Archer’s ongoing Federal Aviation Administration (FAA) certification program. 

Financially, Archer has maintained a strong liquidity position, with over $520 million on hand at the end of Q1 while continuing to invest heavily in the Midnight program. This cash runway gives Archer the resources to continue advancing towards commercialization.

For investors who want to invest in leading companies, ACHR is one of the next-gen aviation stocks that people should consider closely. It offers a great mix of strong growth potential as well as a cheap valuation at just $4.35 per share at the time of writing.

Lockheed Martin (LMT)

Close top view of a Lockheed Martin (LMT) F-35C Lightning II with afterburner on
Source: ranchorunner / Shutterstock.com

Lockheed Martin (NYSE:LMT) is heavily involved in developing hypersonic weapons and aircraft. The company recently unveiled the Mako Multi-Mission Hypersonic Missile that is designed for versatility and speed. 

Lockheed Martin posted sales of $17.2 billion in the first quarter, up 14% compared to Q1 2023. Net earnings were $1.5 billion, or $6.39 per share, compared to $1.7 billion, or $6.61 per share, in the prior year’s quarter. Cash from operations was $1.6 billion and free cash flow was $1.3 billion in Q1 2024.

Operationally, all four of Lockheed Martin’s business segments grew sales year-over-year (YOY). Aeronautics revenue increased 9% driven by higher F-35 and F-16 volume.

Financially, Lockheed Martin continued to generate strong cash flow while returning significant cash to shareholders. The company paid $780 million in dividends and repurchased $1 billion of stock in Q1. It also issued $2 billion in new debt and ended the quarter with $2.8 billion in cash on hand.

Leidos Holdings (LDOS)

Leidos (LDOS) logo on the side of an office building
Source: Jer123 / Shutterstock.com

Leidos Holdings (NYSE:LDOS) is involved in various hypersonic programs for the U.S. Department of Defense. The company recently completed key reviews for the Air Force Research Lab’s (AFRL) hypersonic projects.

Leidos posted revenues of $3.98 billion for the first quarter, up a healthy 7% YOY. All customer segments saw increased demand, especially for managed health services. Profitability was a key highlight in Q1. Net income surged 73% to $283 million, or $2.07 per diluted share. Adjusted EBITDA jumped 42% to a record $490 million, with EBITDA margins expanding significantly from 9.4% to 12.3% YOY. 

Given the strong start to the year, management raised its full-year 2024 guidance across all key metrics. Leidos now expects revenue of $16 billion to $16.4 billion, adjusted EBITDA margins in the mid-to-high 11% range, non-GAAP earnings per share (EPS) of $8.40 to $8.80 and operating cash flow of approximately $1.3 billion for the year. With all these factors considered, LDOS is one of the next-gen aviation stocks for investors to strongly consider right now.

On the date of publication, Matthew Farley did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.


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