Anduril Keeps Winning Billion-Dollar Contracts and You Can't Buy It. Here Are 3 Public Stocks That Get Paid Alongside It.

Source Motley_fool

Key Points

  • Anduril just raised a bunch of money to increase its defense ambitions.

  • Stocks like Kraken Robotics, Archer Aviation, and Karman Holdings are sellers in the Anduril supply chain.

  • Investors can buy these three stocks with varying risk tolerances.

  • Motley Fool Issues Rare "Total Conviction" Buy Alert ›

Anduril is trying to disrupt and modernize the technology supply chain for the U.S. military. It recently raised $5 billion at a $61 billion valuation to expand its manufacturing capabilities for drones, underwater vehicles, and other military technologies it is developing.

The problem is that individual investors will find it nearly impossible to buy shares of Anduril because it is privately held. However, Anduril does not manufacture pieces of its technology itself, with many suppliers and partners working alongside it. Here are three stocks that get paid alongside Anduril's growth and could be attractive buys right now.

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Battery and sensor provider

First up is Kraken Robotics (TSXV: PNG). The small-cap stock sells various components for modern subsea military technologies. These include insulated batteries that operate at great depths, sensors, sonar equipment, and other components used on submarines and underwater drones.

Securing the oceans for commerce is becoming increasingly difficult due to modern drone technology, as evidenced by the current issue in the Strait of Hormuz. Kraken is selling components like batteries and sonar equipment to defense contractors like Anduril, which is manufacturing an underwater drone that can help navies monitor and secure assets without putting humans at risk.

In 2026, Kraken is estimating it will generate over $300 million Canadian dollars in revenue ($212 million U.S.). With its recent large acquisition of the Covelya Group to consolidate its position as a subcontractor in underwater equipment, revenue should grow to much larger levels in 2027. With the stock down to a market cap of $1.1 billion, shares could be a good buy to ride the Anduril wave.

A fleet of drones flying in formation.

Image source: Getty Images.

Vertical takeoff technology for the military

Moving from the ocean to the air, Anduril has a direct partnership with Archer Aviation (NYSE: ACHR) to develop an electric vertical takeoff and landing (eVTOL) aircraft for the U.S military. By leveraging vertical takeoff technology and battery-powered propulsion, Anduril believes it can develop an eVTOL drone for military applications.

Besides an Anduril partnership, Archer Aviation does not have much of a financial business to show for itself today. Revenue is minimal because its commercial eVTOL is still working through approvals from the Federal Aviation Administration, a process that will be quite difficult for a novel aircraft technology. Upfront investments are leading to significant cash burn, with free cash flow of -$681 million over the last 12 months.

This makes Archer Aviation a riskier stock to bet on to ride the Anduril growth wave than Kraken Robotics, which has real revenues today.

Missile and rocket components

Last is Karman Holdings (NYSE: KRMN), a defense subcontractor that sells components that help missiles and rockets maintain structural integrity at intense heat and in harsh operating environments. These components are sold to rocket companies and missile providers.

Anduril is trying to disrupt the legacy missile supply chain amid the increased need for interceptors and will need to work with Karman Holdings to get its manufacturing up and running. The more missiles that Anduril produces, the more orders will flow to Karman Holdings.

The company is also more diversified, with more than one customer. Its revenue grew 24.4% organically to $182.5 million last quarter, with a backlog of $1.3 billion, up 65% year over year. Backlog growth is the key, as it indicates future growth locked in with its various defense and spaceflight customers.

Karman trades at a premium valuation, with a price-to-sales ratio (P/S) of 7. However, this valuation could decline quickly if Karman continues to grow at an aggressive pace.

Depending on your risk tolerance, these are three stocks you can buy to ride any growth of Anduril's business behind the doors of private markets.

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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Karman and Kraken Robotics. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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