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The world is currently scrambling to find stocks most likely to benefit through the rest of the 2020s.
We can safely expect to see a pro-market Republican take the helm of the world’s leading economy later this month, one with a reputation for enthusiasm about domestic U.S. manufacturing investment.
The incoming administration is thus practically guaranteed to throw serious money at American companies bringing U.S. manufacturing back into the 21st Century – reflecting a continuation of Biden-era initiatives.
At the same time, an unwavering governmental enthusiasm for the country’s defence sector is set to carry over, leading to investments in the state and private companies that make up that massive portion of America’s overall economy.
And then, in the background, countries are busy ramping up their armies and defence forces; global governments are rushing to secure domestic access to critical minerals and strategic technologies; and, trade ties across the ‘Western World’ are truly regalvanised.
At the intersection of all this, one stock listed on the ASX is impossible to ignore: Australian-listed and U.S.-based Amaero International Ltd (ASX:3DA). The company specialises in producing refractory powders for aerospace and defence applications derived from the same critical minerals – including niobium and titanium – supplies of which the world is rushing to secure and grow.
Re-rating expected amid US Gov’t support
Perhaps it’s unsurprising that Amaero’s stock – especially with its exposure to the U.S. defence sector – is showing one-year returns up +40%.
The value proposition of a company at the intersection of a renewed push for American domestic manufacturing and the overarching Western defence revitalisation thematic is obvious.
Further, Amaero CEO Hank J. Holland told HotCopper he expects the market to only pay more attention through CY2025 and into 2026. No small part of that heightened awareness will likely be tied to the company’s recent successful application for a multi-million dollar loan from the U.S. export finance agency.
That final approval for a loan with ‘favourable terms’ from the Export-Import Bank of the United States is no small achievement. Amaero has been awarded the first such loan supporting an advanced materials and additive manufacturing business. It’s only the sixth under the Biden-led Make More in America program.
It validates the alignment of Amaero’s strategy and capabilities with U.S. priority policies – underscoring the certainty investors can expect to see coming from the United States concerning domestic manufacturing (which means American jobs).
That funding, Holland says, is also set to carry the company across the coming years.
“The stock price has actually been quite weak in the last quarter of [2024] … it’s rebounded a bit this month. While we care about the share price, I tend to stay much more focused on execution,” Holland said.
“I’ve got this fundamental belief that if we execute, and we do what’s right – our north star – our focus, is creating long-term shareholder value.”
With a strong cash position now enhanced by that funding; commercialisation set for H2CY25; and, an almost guaranteed ongoing support base from Washington, Holland expects a re-rating to hit this year.
“I would expect a significant re-rating of our business as we achieve critical milestones ahead in the calendar year,” Holland told HotCopper. A $20M capital raise to be conducted later this year will, all cards in order, well and truly put the company on a solid path towards serious potential for profit generation.
Taking the lead…
Holland, originally from Texas, has been a career investor. He was Managing Director of AllianceBernstein and Merrill Lynch and later started his own private equity firm, Pegasus Growth Capital.
He’s a man of conviction – he gathered a group of former British SAS commandos under Project Apollo to evacuate vulnerable women and children from war-torn Ukraine.
After finding Amaero in 2022, he led a significant restructuring, turning over the board and management team, and moving operations to Tennessee.
Make no mistake: He has skin in the game, owning 20% of Amaero. Pegasus holds another 40%-ish.
Leadership strength: Trump advisor in ranks
Adding to the leadership of Hank Holland is no shortage of high-impact board members and executives.
This includes now-retired Lieutenant General H.R. McMaster, the former National Security Advisor to President Trump during his first administration. This role saw McMaster participate in the US National Security Council (NSC), which is ‘the President’s principal forum for considering national security … coordinating these policies among various government agencies’.
Ex-DARPA Board addition a secret weapon
More recently, Michael Maher – a former thirty-year staffer of the USA’s Defense Advanced Research Projects Agency (DARPA,) has joined the board.
For those out of the loop, the inclusion of a top mind from DARPA will likely prove to be worth its weight in gold (or let’s say titanium!). The agency functions as the special research laboratory for the U.S. military. Its contribution to the planet is hard to overstate.
DARPA, for one, invented ARPANET – a way to convey information across a network of receiver sites throughout the USA, which could re-route as required in the event of a nuclear war.
If that sounds like something familiar, it is – ARPANET would later become the internet, where you’re reading this article right now!
DARPA also played a huge part in bringing GPS to the world; Apple’s Siri is also shockingly similar to an early 2000s research program called CALO. (Silicon Valley, after all, was ultimately borne from the U.S. defence sector.)
To explain why this matters for shareholders: It helps to have experts well familiar with the US government procurement bureaucracy. Especially with the calibre and respect of DARPA.
So, what’s ahead for Amaero?
Speaking to HotCopper, company chief Hank J. Holland believes shareholders can expect to see further long-term supply agreements inked throughout the year.
“We will come out of fiscal year 25 and be fully funded … to take us through the next several years and allow us to achieve the top line revenue and EBITDA that analysts expect,” Holland said.
The most recent announcement contains words of support from Tennessee Congressman Chuck Fleischmann.
“Congressman Chuck Fleischmann, who happens to be our congressman in our district, is on the Appropriations Committee… we’ve worked very closely with the Congressman about the FY25 budget that is coming out, and appropriation opportunities for Amaero,” Holland said.
“We remain an ASX-listed business [but] the thrust of our business is in the US, today our facilities are in the US, our executive team is in the US, all of our staff’s in the US, our customers are in the US… this is yet another important nexus to the United States.”
Over the Christmas period, the company inked a long-term titanium supply agreement with U.S.-based The Perryman Company (a deal which will see Amaero supply one hundred metric tonnes in 2026 and 2027).
In the background, the company saw its Tennessee-based manufacturing facility receive key U.S. accreditation, further entrenching the company within the U.S. defence force ecosystem. That accreditation is the Defence sector’s AS9100D aerospace quality certification, meaning Amaero meets a particularly stringent set of requirements now the gold standard in the US defence supply chain under National Quality Analysis (NQA) guidelines.
Other companies with this certification include NASA, Lockheed Martin and Boeing.
At around the same time, Amaero also ordered a third atomizer – crucial machinery assets that allow the company to produce the alloy powders needed to make modern missiles (and spacefaring vehicles).
I’m not allowed to write Amaero could be ‘going to the moon’ – but given what they help produce, maybe it’s not too unrealistic.
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