1 Stock I'd Buy Before Archer Aviation

Archer Aviation (NYSE: ACHR) is an early leader in electric vertical takeoff and landing (eVTOL) aircrafts. The company is currently going through testing and certification processes needed to launch commercial consumer operations, and it's also attracted some attention as a defense play. Through a partnership with defense-tech innovator Anduril, Archer is also developing and testing eVTOL craft for military purposes.

Analysts are betting that Archer will make a transition into posting sales this year because potential consumer launches are lined up in Saudi Arabia, Dubai, and other markets. The company also continues to move forward with testing procedures needed to potentially receive operational approval from the Federal Aviation Authority (FAA). Meanwhile, it's possible that defense applications could become an even more powerful performance driver over the next five years.

Image source: Archer Aviation.

This stock could be a much better buy than Archer Aviation right now

Despite some volatile swings, Archer Aviation stock is up roughly 9% over the last year of trading. Meanwhile, the company's share price is down approximately 34% from its one-year high. Rather than chase a potential rally for Archer, I think there's a much better buying opportunity for investors.

Kraken Robotics (OTC: KRKN.F) is a stock that I've been buying over the last year, and I continue to be excited about the company's long-term prospects. Gains of roughly 200% over the last 12 months have pushed the company's market capitalization up to about $1.8 billion.

While I also own Archer Aviation stock, I have reduced my holdings in the company and diverted proceeds from share sales into Kraken Robotics stock. Kraken is a leading provider of deep-sea battery and synthetic aperture sonar (SAS) mapping technologies. Here's why I think that Kraken looks like the better long-term investment right now.

Archer Aviation has a market capitalization of approximately $5.8 billion despite still being in a pre-revenue state. Meanwhile, Kraken has just a fraction of the valuation and is already posting meaningful revenue. The Canada-based deep-sea tech specialist saw sales grow 60% year over year to 31.3 million Canadian dollars in last year's third quarter.

Not only is Kraken posting meaningful sales and strong revenue growth, it's also recording very impressive margins. Despite being a hardware-focused company in an emerging product category, the business is already posting profits. The company's gross margin came in at 59% in last year's third quarter, and the business posted a net income margin of 10.5% in the period.

Like Archer, Kraken also has a defense partnership with Anduril. The next-gen defense tech company is using Kraken's battery and SAS tech for autonomous underwater vehicles (AUVs), and Kraken stands a good chance of benefiting from rising military spending from Canada, the U.S., and other NATO allies. With Kraken already posting strong margins, the company has the potential to deliver huge returns as sales continue to scale.

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