1 Stock I'd Buy Before Joby Aviation

Joby Aviation (NYSE: JOBY) has positioned itself as an early leader in the electric vertical take-off and landing (eVTOL) aircraft space. The eVTOL specialist went public through a merger with a special purpose acquisition company (SPAC) in 2021 and has seen some volatile swings since its public debut. Despite big pricing volatility, the company's share price is up roughly 53% from market close on the day of its post-combination trading.

Joby's business has just started to post meaningful sales, and it remains to be seen whether the company's aircraft will receive necessary approvals from the Federal Aviation Administration (FAA). Alternatively, there are feasible paths for commercial operations for its eVTOL craft to begin in Saudi Arabia and other territories this year. The company has also attracted interest as a defense play, and some investors are betting that autonomous eVTOL drones could wind up being a significant long-term growth driver.

Image source: Getty Images.

While it's possible that surging demand for eVTOL craft could help make Joby stock a big winner over the long term, I think there are better plays for investors seeking next-generation defense and transportation technologies. Along those lines, Kraken Robotics (OTC: KRKN.F) is a stock that I've been buying lately.

Joby could be a winner, but Kraken stock looks like a better buy

Kraken is a Canada-based designer and manufacturer of deep-sea battery and sonar technologies. The company also provides software to support these products. Kraken's batteries make it possible for undersea drones to reliably function at depth, and its sonar mapping technologies provide seabed visuals at a granular level of detail.

Kraken already has reliable revenue streams and is posting encouraging growth. Sales increased 60% year over year to 31.3 million Canadian dollars (about $22.5) in last year's third quarter. Even better, the business is posting strong gross margins and is actually already profitable.

Kraken recorded a 59% gross margin in last year's third quarter -- a level that looks quite strong for a hardware company that's still in the early stages of ramping up its manufacturing footprint and leveraging economies of scale. Meanwhile, the business posted net income of approximately CA$3.3 million in the period -- good for a 10.5% net-income margin.

With a market capitalization of approximately $1.7 billion, Kraken has a growth-dependent valuation. On the other hand, the business is already posting meaningful sales and earnings and expanding at an impressive pace. Meanwhile, Joby Aviation has a market cap of roughly $14 billion and a far more speculative commercialization trajectory and path to eventual profitability.

Keith Noonan has positions in Kraken Robotics. The Motley Fool has positions in and recommends Kraken Robotics. The Motley Fool has a disclosure policy.