Why is Archer Aviation Inc. (ACHR) among the best up-and-coming stocks to buy according to analysts?

On November 30, 2024By Littum

We have recently compiled a list of 10 Best Up and Coming Stocks to Buy According to Analysts. In this article we will take a look at where Archer Aviation Inc. (NYSE:ACHR) faces the other up and coming stocks.

Donald Trump’s victory in the recent presidential election is expected to encourage companies that have been hesitant to pursue IPOs in 2025, taking advantage of the positive market reaction and expected deregulation. After the election, the Russell 2000 index rose to a near three-year high, while the S&P 500 hit record levels, creating a favorable environment for risk-taking among investors. Nearly $40 billion has been raised through IPOs this year, marking a 64% increase from 2023, though still below the pre-pandemic average. Trump’s pro-cryptocurrency stance could also affect the market, with expectations of increased activity in crypto-related IPOs if regulatory conditions improve. While an immediate surge in IPOs is unlikely due to a limited number of companies ready to file, there is optimism for a larger set of IPOs next year as companies seek to raise capital and insiders look for liquidity.

In general, there is also a noticeable disconnect between the tech IPO market and the broader IPO landscape, with many companies choosing to stay private longer due to the growth of private credit as an alternative source of funding. However, there is optimism that public markets will regain attractiveness as valuations rise and investor demand for public offerings increases. On October 24, Ashley MacNeill of Vista Equity Partners appeared on CNBC to shed light on the then-stagnant state of the IPO market. We covered this in detail in our 10 Best IPO Stocks to Buy Heading into 2025 article, here is an excerpt from it:

“MacNeill stressed that for the IPO asset class to work effectively, 3 key conditions must align: a stable macroeconomic environment, investor willingness to deploy capital, and the ability of companies to communicate their earnings forecasts….

In addition, expectations for M&A activity are increasing, driven by renewed investor enthusiasm. Mitch Berlin, vice president of strategy and transactions at EY Americas, joined CNBC’s ‘The Exchange’ on Nov. 22 to discuss what he sees for M&A activity in 2025. He noted that while there is a general sense of optimism , it is important to differentiate between private equity and corporate growth. Berlin expects a 16% increase in private equity activity and an 8% increase in corporate transactions, driven mainly by pent-up demand and significant capital reserves available for investment. This growth is also influenced by mature assets that private equity firms are eager to tap.

Looking ahead, Berlin speculated on potential headlines for early 2025, predicting major deals primarily in the technology sector, driven by advances in artificial intelligence. He also highlighted the continued importance of oil and gas in M&A, albeit from a value rather than volume perspective. Life science companies are expected to use their cash balances to make strategic acquisitions to rebuild their research and development pipelines. Furthermore, he expressed optimism that regulatory hurdles from the Federal Trade Commission (FTC) and the Department of Justice (DOJ) would become less of a barrier, allowing for smoother deal approvals.

Berlin assured that the current environment would not prevent the conclusion of agreements. He expects interest rates to fall further in 2025, which could stimulate more activity. Many deals are financed through cash, and private credit remains a significant source of funding, with three-quarters of deals this year supported by such credit.

Berlin’s insights reflect a robust outlook for both private equity and corporate M&A activity as companies adapt to changing market conditions. As companies adapt to the changing market, investors should be aware of new opportunities. With a strong IPO market expected in 2025, this context sets the stage for our upcoming list of the 10 best up-and-coming stocks to buy according to analysts.

Methodology

We used the Finviz stock screener to compile an initial list of 30 stocks that went public in the last 5 years. We then selected the 10 stocks with high analyst upside potential and which were also the most popular among elite hedge funds. The stocks are ranked in ascending order according to the analysts’ upside potential.

Why are we interested in the stocks that hedge funds are piling into? The reason is simple: our research has shown that we can outperform the market by mimicking the best stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (pe more details here).

A technician assembling an electric plane, highlighting the company’s manufacturing capabilities.

Average upside potential per November 26: 38.79%

Number of hedge fund holders: 24

Archer Aviation Inc. (NYSE:ACHR) is an urban air mobility company focused on developing electric vertical takeoff and landing (eVTOL) aircraft designed for efficient and sustainable air transportation in urban environments. It is working to manufacture and certify its aircraft, with plans to launch air taxi services in several cities by 2026.

The Federal Aviation Administration (FAA) has made significant progress in the regulation of electric air taxis, paving the way for their commercial launch in the United States by 2025. This development means a great leap forward for urban air mobility. Archer Aviation Inc. (NYSE: ACHR) is at the forefront of this revolution and is actively working with the FAA to certify its Midnight aircraft, an advanced eVTOL aircraft. The company has completed the initial certification phases and is now focused on meeting the strict safety standards set by the FAA. In addition, the company is working with international regulators to expand its global reach.

A strategic partnership with Falcon Aviation and Etihad will facilitate the recruitment and training of pilots, the establishment of maintenance protocols and the organization of initial regional pilot flight exhibitions expected to be launched in 2025. In addition, the company has agreed with Japan Airlines and Sumitomo Corporation’s joint venture, Soracle, to introduce eVTOL technology to the Japanese market. This collaboration aims to bring Midnight flights to congested cities like Tokyo, offering a more efficient and sustainable form of transport.

With strong industry partnerships and a relentless commitment to innovation, the future of electric air taxis looks promising. As a result, Archer Aviation Inc. (NYSE:ACHR) as a compelling investment opportunity.

Total ACHR ranks 10 on our list of the best upcoming stocks to buy according to hedge funds. While we recognize the potential of ACHR as an investment, our conviction lies in the belief that AI stocks hold great promise to deliver high returns and do so within a shorter time frame. If you’re looking for an AI stock that has more promise than ACHR but is trading at less than 5 times its earnings, check out our report on cheapest AI stock.

Disclosure: None. This article was originally published on Insider monkey.