AEVEX Corp. (NYSE:AVEX) was among Jim Cramer’s recent stock calls on Mad Money. Cramer called it a “very cool story” during the episode, as he stated:
I’ve been watching this one because we know from the wars in Ukraine and Iran that drones are indeed the future of warfare and Wall Street’s clearly interested in these stories… There’s more noise in these numbers than I’d like because AEVEX is backed by a private equity firm… Here’s the good news: With those rough numbers that AEVEX provided for the first quarter, their profitability bounced back in a big way… It’s good to see AEVEX turning a profit. I like IPOs that are profitable… Fortunately, AEVEX is using most of the IPO proceeds to pay down debt…
Let’s talk about valuation. This is what I find most intriguing. AEVEX priced its IPO at $20. It then opened at… just over $23 this morning and finished the day at just under $27, up 35%. At this level, the company’s valued at roughly $3 billion… AEVEX numbers are all over the place. We have no idea where they’ll settle. That said, $3 billion seems, I think, too low of a valuation for AEVEX. Of course, this happened, I think, because the war wound down the day it came public. Even if we have to take last year’s revenue total of $433 million, and we’re talking about a stock that’s roughly 7 times last year’s sales. Obviously, they’re on track to do much better than that, even if they can’t maintain their insane growth rate from the first quarter. And remember, AEVEX is profitable. If we very crudely estimate, say $80 million in net income for this year, that’s 4 times the first quarter result. Then we’re talking about a stock that trades at 38 times earnings. Okay, not bad for such an exciting story, I think…
Here’s the bottom line: AEVEX is right at the center of maybe the hottest single trend in the defense industry, which itself is booming at the moment. And given this company’s rough numbers, I think the stock’s too cheap here, which is why you have my blessing to buy it at these levels, even if the war’s reaching its conclusion. It’s a very cool story, and AEVEX is doing important work.
A stock market chart. Photo by Arturo A on Pexels
AEVEX Corp. (NYSE:AVEX) manufactures autonomous systems, including modular uncrewed aircraft and surface vehicles, as well as AI-driven navigation technologies. In addition, the company provides specialized engineering services, including aircraft modification and airborne intelligence solutions for mission-specific needs.
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