Jim Cramer - Mad Money AeroVironment AVAV-Q WEAK BUY Jul 17, 2024

Good place for inexpensive military equipment. Would recommend it. 

Confusing. They just delivered record revenue, up 24% YOY and they won a 5-year contract with the US Army. The street expected higher guidance and not a reiteration, so shares are selling off.

We are fairly surprised AVAV has not done better, considering the ongoing wars and the increased defense spending movement. It remains net debt free and good earnings growth is expected, just not as much as previously. At 40X earnings, investors are questioning its premium valuation in light of slowing growth. It is also in the cross hairs of the new US government, which recently issued 'stop work' orders on some contracts to foreign entities'. We would like to see it as a HOLD, but the political risk is hard to quantify. If the Ukraine War ends there will also likely be a sentiment shift (negative) towards its growth prospects. We would thus be OK letting this go. 
Unlock Premium - Try 5i Free