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Due to the emergence of the newest technology in urban air mobility (UAM), undervalued flying car stocks are taking off.
Generally, these companies are not well-understood by mainstream investors. Almost everyone has heard about Tesla (NASDAQ:TSLA) or the importance of electric vehicles, but people don’t naturally think outside the box.
Sometimes the best opportunities can be found in places others aren’t looking, especially if the companies that hold the most promise operate primarily outside of the U.S. in emerging markets. Buying undervalued flying car stocks could then possibly diversify your overall holdings, as well as tap into a load of upside potential.
So, here are the best undervalued flying car stocks to buy for September.
Undervalued EHang (NASDAQ:EH) has made a name for itself with its autonomous aerial vehicle technology. The company has showcased urban air mobility solutions in cities around the globe, gaining regulatory approval in several jurisdictions.
Investors have several options to determine if a stock is undervalued or not. Some rely upon complicated financial multiples or cash flow projections, while others place more weight on where institutional investors are putting their money. In EH stock’s case, its shares rose by 28% in July after announcing a $23 million private placement led by South Korean music producer and media mogul, Lee Soo Man.
Further, here is another reason why EH could be one of those undervalued flying car stocks. It recently broke an important trendline it held since July, which suggests that a cheaper share price could be on the cards shortly. It should therefore be one of those picks to keep on your watchlist.
Terrafugia, owned by the global automotive giant Geely (OTCMKTS:GELYF) (which also owns Volvo and Lotus), is a pioneer in flying cars. Terrafugia’s Transition aims to be one of the first flying cars available commercially, blurring the lines between personal automobiles and aircraft. This one is more of a contrarian pick. It shut down its U.S. operations this year, but its development continues in China.
In addition to its development of flying cars, GELYF is also unlocking a significant value catalyst. It witnessed a substantial shift from hybrid to battery electric vehicles (BEV) in its April 2023 sales. While overall vehicle sales surged 58% year over year (YOY), BEV sales skyrocketed 148%. Despite its major electrification push, Geely has recently introduced Galaxy, a premium electrified brand, with plans for both plug-in hybrid (PHEV) and BEV models.
As a penny stock, it also trades at undervalued levels compared with its potential such as its price-to-sales (P/S) ratio, thus making it one of those undervalued flying car stocks.
Lilium (NASDAQ:LILM) is a Germany-based company that has been making waves with its electric vertical takeoff and landing (eVTOL) aircraft.
The company has a distinctive design approach that sets its aircraft apart from competitors. Their jet has a large number of small electric engines that allow it to transition from vertical takeoff to forward flight efficiently.
Wall Street considers LILM stock particularly undervalued with an average consensus rating of “Buy”. It predicts a significant rise of over 100% for the stock in the upcoming year, setting the price target at $2.82.
However, one concern is that LILM had a cash burn of €267m over the past year, giving it a cash runway of roughly nine months. This short runway indicates the need for the company to either significantly reduce its cash burn or raise funds soon. Due to the absence of debt, it may opt to take some on, but it could also issue shares, which would dilute existing shareholders.
For this reason, although LILM trades at undervalued levels, it may be better for people to keep this one on a watchlist to see how it intends to alter its capital structure.
On the date of publication, Matthew Farley did not have (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