Exploring Affordable Shares of Cathie Wood's Portfolio, Priced Under $15, Anticipated to Skyrocket under the Incoming Trump Administration
Cathie Wood, the CEO of Ark Invest, is renowned on Wall Street for her supportive views on innovative technologies such as artificial intelligence (AI) and genomics. Her firm, Ark Invest, is particularly bullish on the electric vehicle (EV) industry, with Tesla holding its top position.
Besides EV cars, Wood has faith in another untapped potential within the electric transportation sector, known as electric vertical take-off and landing (eVTOL) aircraft. Ark Invest possesses a stake in eVTOL pioneer Archer Aviation, which is traded on the stock market as ACHR.
Archer's share price has rocketed by 82% in 2024, placing it close to its peak prices seen in the past three years. With such significant gains, it's possible investors have already missed out on the opportunity. However, I foresee a potential catalyst for Archer heading into 2025.
A recent development in Archer's strategy caught my attention, which could serve as a significant boost for the company.
Archer's undiscovered prospect
Initially, Archer was positioned as a possible airborne alternative to traditional ride-hailing services like Uber or Lyft. Unlike luxury services from Blade Air Mobility, Archer concentrated on easing traffic congestion in cities by offering an alternative transport solution to taxis or subways.
However, in a recent video, Archer CEO Adam Goldstein unveiled a hidden opportunity for the company in the public sector.
"No need for runways." @ArcherAviation CEO @adamgoldstein13 discusses the future of commercial taxi aviation https://t.co/b15WPRp46y pic.twitter.com/znhk5azrrz-- Bloomberg TV (@BloombergTV) Dec. 13, 2024
Why Archer could take off under President-elect Trump
To fuel its aspirations in defense, Archer partnered with autonomous systems company Anduril. Anduril was founded by Palmer Luckey, a well-known entrepreneur known for selling his virtual reality startup, Oculus, to Meta Platforms. Anduril develops a range of sophisticated rockets and drone technologies. Given their shared expertise in the aviation sector, the integration of Anduril with Archer seems like a logical match.
What's more fascinating about Archer collaborating with Anduril is that its eVTOL planes generate minimal noise, making them an appealing choice for stealth operations in the military. Although this niche market may seem insignificant at first glance, the potential market for stealth operations and military robotics is projected to surpass $100 billion by the start of the next decade.
When discussing the incoming administration, Goldstein stated that he believes Trump could be "extremely positive" and a "powerful benefit" to companies like Archer, helping secure regulatory approvals for commercial growth and becoming more engaged in public sector operations.
Should you buy Archer stock now?
Distinguishing between a genuine business and an enticing narrative is one of the most challenging aspects of investing. In my view, Archer straddles this divide.
Although Archer presents compelling opportunities, it is currently in a non-revenue state. While the company has secured large purchase orders, it has yet to scale up its operations.
Is it likely that Trump will ease regulations, accelerating Archer's commercialization timeline? Possibly, but it's uncertain if the new administration will prioritize such an issue.
Furthermore, although Archer's potential uses in the public sector are attractive, it may be several years before its aircraft are introduced.
I remain somewhat intrigued and cautiously hopeful that Archer could see success over the next four years. However, investing in Archer is best suited for individuals who can afford a modest allocation in their portfolio allocated towards speculative opportunities. If you find this level of risk too high, I advise looking for more established opportunities in the EV or defense sectors instead.
Archer's collaboration with Anduril, an autonomous systems company, could open up a significant market for the eVTOL startup in the military and stealth operations, potentially worth over $100 billion by the next decade. With Trump's administration expected to be "extremely positive" and a "powerful benefit" to companies like Archer, securing regulatory approvals for commercial growth and engaging in public sector operations, investing in Archer stock might offer promising prospects for speculative opportunities.
Given Archer's current non-revenue status and uncertainty regarding the new administration's priorities, buying Archer stock now carries a high level of risk. Investors with a modest allocation towards speculative opportunities might still find it intriguing, but those seeking more established investments in the EV or defense sectors might want to consider other options.
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