Latest news with #VerticalAerospaceLtd
Yahoo
05-05-2025
- Business
- Yahoo
Is Vertical Aerospace Ltd. (EVTL) the Best Small Cap Stock to Buy with the Biggest Upside Potential?
We recently published a list of . In this article, we are going to take a look at where Vertical Aerospace Ltd. (NYSE:EVTL) stands against other top small cap stocks to buy with biggest upside potential. On April 24, Jill Carey Hall, BofA Securities head of U.S. small/mid-cap strategy, appeared on 'Closing Bell' to talk about the impact of tariffs on small caps. She also discussed the outlook for the category, saying that the earnings backdrop is essential. When we look back a year ago, investors were excited about small caps, as the earnings were recovering and the market was coming out of the 2023 earnings recession. Everyone expected that these stocks would see double-digit earnings growth by mid-last year, outpacing large caps. That got pushed out for over a year, and now the sector has sold off a lot. While we have gotten some potential good news on tariffs, there is still a lot of uncertainty, and we are in a backdrop where earnings revisions have still been negative. She opined that she would feel more comfortable if we were in a backdrop where there was confidence in earnings recovery because last earnings season, the commentary was a lot more negative from small-cap companies than large-cap companies. So far, this earnings season is still early for small caps, but guidance in both large and small has been weak. READ ALSO: and . Hall said that the sector would see a much better picture if earnings revisions turned around with higher confidence, and not only the tariffs were better than expected but also the economic backdrop was better. However, we are also in a place where economists think the Fed will stay on hold this year, and the Russell has been very sensitive to Fed expectations. Her outlook for small caps thus points towards a more credit-sensitive environment highly tethered to Fed expectations, with no anticipation of a rate cut this year. She also highlighted that looking at corporate commentary as small-cap reporting kicks off is important. Not all small caps are created equal, even when some people consider them to be so. Hall opined that this is definitely a year where you want to be selective in small caps, focusing on stocks with strong margins amid tariff uncertainty. She favored high-quality domestic stocks, steering clear of tariff and refinancing risks and focusing on stocks with positive revisions in this broad backdrop of negative revisions. There are groups of stocks that are more sensitive to tariffs, just as there are groups that are more global and domestic. Similarly, some groups are more levered with higher refinancing risks within small caps if the rate stays higher and credit spreads stay elevated. Therefore, she reasoned that she would stick with higher-quality stocks that are more profitable and have strong operating margins. Stocks with these characteristics have been some of the top performers within the industry amid tariff risks. From a sector perspective, if investors want to be more defensive, utilities screen well across the work, both in small and large caps. There will thus be opportunities in the segment, according to Hall, but one needs to be selective. She also expressed positive sentiments for mid-caps, which have been one of the best performers in the sector this year. They have seen much better revision trends, cleaner balance sheets, and fewer risks from potential earnings hits from tariffs than small caps because the latter have thinner margins and could see a greater hit. We sifted through stock screeners, financial media reports, and ETFs to compile a list of 30 small cap stocks and chose the top 11 with the biggest analyst upside potential as of May 2, 2025. We also included the number of hedge fund holders as of Q4 2024, which we sourced from Insider Monkey's database. The list is presented in ascending order of stocks' upside potential. 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 363.5% since May 2014, beating its benchmark by 208 percentage points (). A prototype of the company's electric vertical take-off and landing vehicle, hovering above the runway. Market Cap: $321.30 million Analyst Upside: 224.84% Number of Hedge Fund Holders: 8 Vertical Aerospace Ltd. (NYSE:EVTL) is a global aerospace and technology company that designs, manufactures, and sells zero-operating-emission electric vertical takeoff and landing aircraft. It employs cutting-edge technology from the energy, automotive, and aerospace industries for electric aviation and its use in the advanced air mobility (AAM) market. On March 20, analyst Austin Moeller from Canaccord Genuity maintained a Buy rating on Vertical Aerospace Ltd. (NYSE:EVTL) and set the price target at $13.50. The analyst said the company holds a promising position in the eVTOL market. Its VX4 prototype is a full-scale aircraft that allows a streamlined certification process and efficient data collection. This distinguishes the company from its competitors, who scale up from subscale models that potentially complicate development. Moeller also reasoned that VX4 offers higher cargo capacity and passenger comfort, which makes it an attractive choice for premium travelers and supports the company's future outlook. Vertical Aerospace Ltd. (NYSE:EVTL) also has a strong technical team that includes experienced engineers and test pilots with considerable industry backgrounds. This depth of expertise supports its ability to develop commercially viable eVTOL aircraft. The analyst opined that Vertical Aerospace Ltd.'s (NYSE:EVTL) strategic interest in securing investments from a battery OEM or a large aerospace and defense partner could potentially improve its technological and financial capabilities. It also has the potential for innovative applications and reduced operational expenses, further supplementing the buy rating. Overall, EVTL ranks 3rd on our list of top small cap stocks to buy with biggest upside potential. While we acknowledge the potential for EVTL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than EVTL but trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
26-02-2025
- Business
- Yahoo
Hedge funds owners may take dramatic actions as Vertical Aerospace Ltd.'s (NYSE:EVTL) recent 20% drop adds to one-year losses
Given the large stake in the stock by institutions, Vertical Aerospace's stock price might be vulnerable to their trading decisions Mudrick Capital Management, L.P. owns 61% of the company Insiders own 18% of Vertical Aerospace Every investor in Vertical Aerospace Ltd. (NYSE:EVTL) should be aware of the most powerful shareholder groups. We can see that hedge funds own the lion's share in the company with 61% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company. And so it follows that hedge funds investors was the group most impacted after the company's market cap fell to US$371m last week after a 20% drop in the share price. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 42% might not go down well especially with this category of shareholders. Hedge funds are often aggressively managed, usually with the goal of focusing on short-term profits. And given they have significant interest in Vertical Aerospace, they have a lot of power, and if the company's performance doesn't improve, it could lead to them influencing management decisions that aren't in line with long-term objectives. In the chart below, we zoom in on the different ownership groups of Vertical Aerospace. See our latest analysis for Vertical Aerospace Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index. Vertical Aerospace already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Vertical Aerospace's earnings history below. Of course, the future is what really matters. It would appear that 61% of Vertical Aerospace shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Looking at our data, we can see that the largest shareholder is Mudrick Capital Management, L.P. with 61% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. In comparison, the second and third largest shareholders hold about 18% and 4.9% of the stock. Stephen Fitzpatrick, who is the second-largest shareholder, also happens to hold the title of Top Key Executive. Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily. The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO. Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances. Our most recent data indicates that insiders own a reasonable proportion of Vertical Aerospace Ltd.. Insiders own US$68m worth of shares in the US$371m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently. With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Vertical Aerospace. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies. I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Vertical Aerospace has 6 warning signs (and 5 which are significant) we think you should know about. But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
