In this article, we will look at the 10 Undervalued Aerospace Stocks to Buy Now.
On June 27, Jonathan Siegmann, managing director at Stifel covering aerospace and defense, appeared on a CNBC interview to talk about his key insights about the sector. He emphasized that investors should move away from the old legacy defense playbook. According to Siegmann, the defense sector is entering a new growth phase driven by fundamental change.
He noted that, rather than relying on traditional, large-scale, and costly programs, the industry is shifting towards new technologies and more efficient products. Siegmann highlighted that his team initiated coverage on 11 stocks across three segments, focusing on companies investing heavily in innovation and cheaper, more effective defense solutions.
In addition, Siegmann pointed to AI, autonomy, and drones as the core technologies reshaping the sector. He noted that companies investing in leadership of drone technologies have shown impressive growth figures.
Siegmann also discussed the mix between legacy expensive programs and new low-cost technologies. He used Ukraine’s drone attacks as an example of effective low-cost warfare, contrasting them with high-tech US systems used in precision strikes like Midnight Thunder Hammer. He noted some budget cuts in traditional programs, like the F-35, but expects more bipartisan support for drones and next-generation defense tech in the 2026 fiscal budget.
With that, let’s take a look at the 10 undervalued aerospace stocks to buy now.
Our Methodology
To curate the list of 10 undervalued aerospace stocks to buy now, we used the Finviz Stock Screener, Seeking Alpha, and Insider Monkey’s Q2 2025 hedge funds database. Using the screener, we aggregated a list of aerospace and defense stocks with a forward P/E less than the S&P 500 P/E ratio, which is 25.10 as per the Wall Street Journal. Next, we cross-checked the P/E ratios from Seeking Alpha and ranked the stocks in ascending order of the number of hedge fund holders. Please note that the data was recorded on September 17.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Undervalued Aerospace Stocks to Buy Now
10. Coda Octopus Group, Inc. (NASDAQ:CODA)
Forward P/E Ratio: 24.29
Number of Hedge Fund Holders: 3
Coda Octopus Group, Inc. (NASDAQ:CODA) is one of the Undervalued Aerospace Stocks to Buy Now. On September 15, Coda Octopus Group, Inc. (NASDAQ:CODA) released results for its fiscal third quarter of 2025. The company delivered $7.06 million in revenue, representing a 29% year-over-year increase and surpassing expectations by $300,800. Moreover, the EPS of $0.11 also topped estimates by $0.02.
Management noted that the growth was mainly driven by its Marine Technology Business. The segment grew 30.7% year-over-year to reach $4 million. Additionally, the newly acquired Acoustics Sensors and Materials Business contributed $1.5 million.
The company also noted advancing its DAVD technology, with $1.5 million in sales this quarter. It is expected to reach $3.5 to $4 million during the year, up significantly from $1.2 million last year. During the quarter, Coda Octopus Group, Inc. (NASDAQ:CODA) completed the DUS Hardening Program funded by the US and a foreign navy, enabling delivery of 16 redesigned untethered DAVD systems to the US Navy for special forces.
Coda Octopus Group, Inc. (NASDAQ:CODA) supplies underwater and subsea technology solutions. Its marine technology division offers real-time 3D to 6D imaging sonars and Diver Augmented Vision Display (DAVD) systems.
9. Innovative Solutions and Support, Inc. (NASDAQ:ISSC)
Forward P/E Ratio: 17.97
Number of Hedge Fund Holders: 10
Innovative Solutions and Support, Inc. (NASDAQ:ISSC) is one of the Undervalued Aerospace Stocks to Buy Now. Innovative Solutions and Support, Inc. (NASDAQ:ISSC) released its fiscal third quarter results on August 14, and the stock has declined more than 41.5% since the announcement.
The company reported a revenue of $24.1 million, which grew 105% year-over-year and was ahead of Wall Street’s target by $4.94 million. The EPS of $0.14 fell short of the consensus by $0.02. Management noted that this was due to the higher costs on the F-16 product line as Honeywell incurred extra expenses to build safety stock before fully transferring production to the company’s new Exton facility. Management noted that once the transition is complete, Innovative Solutions and Support, Inc. (NASDAQ:ISSC) expects improved efficiencies and better margins in fiscal 2026.
The company has finished construction of its Exton facility and expects to complete the interior setup by early fall. This expansion is expected to increase manufacturing capacity and support integration of the new F-16 product line.
Regardless of a 41.5% decrease in share price, Wall Street remains bullish on the stock as analysts’ 12-month price target of $15.55 reflects a 35.22% upside from current levels.
Innovative Solutions and Support, Inc. (NASDAQ:ISSC) designs and manufactures advanced avionic systems for commercial, business, and military aircraft.
