Why smart money is quietly loading up on Kraken Robotics ($KRKNF), the only pure-play subsea drone company in the Western defense ecosystem.

Kraken just tripled its revenue base by acquiring Covelya Group for C$615M, a UK underwater technology firm that brings in roughly C$262M in annual revenue. That deal also deepened their relationship with Anduril, which is building out a full subsea drone division using Kraken’s sensor technology for programs like the Ghost Shark and Dive-LD.

Despite a 24% EBITDA margin and a near-monopoly position in subsea autonomy, the stock trades at just 9.5x pro forma EV/Sales. That is below unprofitable peers like RCAT (20x), ONDS (35x), and UMAC (32x), and only slightly above profitable primes like Kratos Defense (AVAV).

The added layer here is geopolitical. Kraken works with multiple Western navies that are ramping defense budgets independently of U.S. policy, giving it exposure across the entire NATO alliance rather than a single customer.

Near-term catalysts include the Covelya deal closing, a potential TSX uplisting, and the Q1 earnings release. Bank price targets point to nearly 2x upside from current levels.

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