The final frontier of space is getting crowded as a growing number of companies rush to go where no man has gone before. From space tourism and research stations orbiting the moon to the colonization of Mars and an ever expanding network of satellites encircling the Earth, the space sector is red hot right now and seems to have captured the imaginations of corporate leaders and investors. Earlier this year, Ark Invest generated a lot of media attention when it launched its Space Exploration & Innovation ETF (BATS:ARKX) with holdings in many of the top space stocks.
The fund seeks to invest in companies whose work and technologies further space exploration and our understanding of the universe. Year-to-date, the ARKX fund is up just over 1% and currently trades right around $20 a share. While the fund is comprised of many of the biggest names in the space sector, it also holds shares of a number of niche space stocks. These are companies that are not well-known but that are leaders in the space industry’s sub-sectors or are pioneering cutting edge technologies that are moving us further outside Earth’s atmosphere.
In this article, we’ll look at three of the best space stocks for investors to buy to play the space industry’s various sub-sectors:
Best Space Stocks: Maxar Technologies (MAXR)
One of the most diverse and interesting space companies in the U.S. today is Maxar Technologies. The Westminster, Colorado-based company specializes in satellite communications and radar that are used in Earth observation from space. Maxar Technologies is also working with NASA on its Lunar Gateway project that will see a small space station constructed that orbits the moon and serves as a science laboratory and holding area for rovers and robots used to aid mankind in space exploration. If that sounds pretty cool, it’s because it is.
Maxar Technologies continues to attract bullish calls on Wall Street. Earlier in July, investment bank Morgan Stanley (NYSE:MS) initiated coverage of MAXR stock with an “overweight” rating and a $50 price target, saying the shares are currently undervalued. Despite its success, work with NASA, and strong ratings from Wall Street, Maxar Technologies stock is down nearly 8% so far in 2021, opening July 29 at $35.50 a share. The decline stems from the fact that the company has been unprofitable for the past two years, owing largely to the impact of the pandemic.
Morgan Stanley forecasts that Maxar Technologies will return to profitability this year. If the bank’s $50 a share price target proves correct, it would represent a 41% increase from the stock’s current level, indicating lots of upside potential for investors.
Lockheed Martin (LMT)
Bethesda, Maryland-based Lockheed Martin remains a diversified aerospace, defense, information security and technology company with global interests and many lucrative contracts with the U.S. Department of Defense. And Lockheed Martin is increasingly involved in the space sector. The company builds satellites, spacecraft and related technologies that are used for a wide range of purposes — from connecting soldiers in battle to providing GPS directions to suburban drivers who are trying to get to Costco (NASDAQ:COST).
With its growing focus on space, Lockheed Martin is a great way for investors to get exposure to the sector while remaining well-diversified. In its most recent quarterly results, issued on July 26, Lockheed Martin reported that its space business gave its sales a substantial boost.
Specifically, the company’s space unit saw its profits in the quarter grow 33% to $335 million. The space division was a bright spot for Lockheed Martin in a quarter when its total revenue amounted to $17 billion, just slightly above the $16.9 billion forecast by analysts.
LMT stock is up 5% year-to-date at $374.85 a share at the start of July 29.
Best Space Stocks: Iridium Communications (IRDM)
Iridium Communications operates the Iridium satellite constellation, a network of 66 satellites that orbit the Earth and facilitate voice and data communication from hand-held satellite phones and other transceiver units. The McLean, Virginia-based company offers internet and voice service that covers 100% of the world, which enables it to sell access to its satellite network to other companies. IRDM stock recently got a boost when it reported better-than-expected second quarter results. The company’s revenue jumped 7% from a year earlier to $150 million.
Following the strong second-quarter earnings, Iridium Communications raised its 2021 guidance. The company is now forecasting full-year revenue growth of 4% to 5%, up from its previous estimate of 3%. The company’s billable subscriber count totaled 1.62 million at the end of the second quarter, up 19% compared to 1.36 million subscribers at the same time last year. Even with the recent jump, IRDM stock is up less than 5% year-to-date, opening at $40.94 per share on July 29. At its current price, the shares look very affordable.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.