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Is today a good day to buy Martin Aircraft Company Ltd?

Martin Aircraft Company Ltd (ASX: MJP) was back in the news yesterday after it announced an agreement reached with the US-based AvWatch, Inc.

Martin Aircraft, which is striving to commercialise the Martin Jetpack as early as next year, said it had signed a Memorandum of Understanding with the company which provides homeland security professionals and corporations with solutions for conducting routine patrols both efficiently and effectively.

In its announcement, Martin Aircraft said: “The MoU marks a significant step forward for Martin Aircraft in the all-important North American market, as it moves towards commercialisation of the Jetpack.”

Indeed, its first product is known as the ‘First Responder Jetpack’ and has been designed for emergency services including fire crews and search-and-rescue services with the potential to also reach military, recreational and commercial applications – both manned and unmanned.

The agreement with AvWatch will allow Martin Aircraft to demonstrate airborne technology capabilities for the U.S. Department of Homeland Security, the United States Department of Defense and various other government agencies.

Should you buy Martin Aircraft?

Martin Aircraft skyrocketed shortly after its February initial public offering but has since come back down to earth. Indeed, the shares now trade for 72 cents – down from a meteoric high of $3.15 – giving the company a market capitalisation of $126 million.

While the futuristic nature of the business is enough to get investors excited, there are a number of risks investors need to consider before taking a bite of Martin Aircraft. Firstly, the company faces enormous regulatory hurdles in each of its targeted markets and any setback will almost certainly hit the shares for six.

Right now, I believe that the stock is still somewhat expensive given the risks associated with the business – especially after the sudden departure of the company’s founder and director, Glenn Martin, recently – and I will thus be waiting for greater clarification before I even consider buying the stock. In saying that however, I do believe it is one for your long-term speculative watchlist.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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